Hi,
Please tell me the difference betwwen trade discount & cash discount.
Thanks a lot.
Ajay
1 Replies
Lakshmi
(Student)
(1836 Points)
Replied 25 May 2010
|
Cash Discount |
Trade Discount |
|
Is a reduction granted by supplier from the invoice price in consideration of immediate or prompt payment |
Is a reduction granted by supplier from the list price of goods or services on business consideration re: buying in bulk for goods and longer period when in terms of services |
|
As an incentive in credit management to encourage prompt payment |
Allowed to promote the sales |
|
Not shown in the supplier bill or invoice |
Shown by way of deduction in the invoice itself |
|
Cash discount account is opened in the ledger |
Trade discount account is not opened in the ledger |
|
Allowed on payment of money |
Allowed on purchase of goods |
|
It may vary with the time period within which payment is received |
It may vary with the quantity of goods purchased or amount of purchases made |
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