what do you mean by trade and cash discount?
Answers
Content: Trade Discount Vs Cash Discount
A discount given by the seller to the buyer as a deduction in the list price of the commodity is trade discount. A deduction in the amount of invoice allowed by the seller to the buyer in return for immediate payment is cash discount. Purpose. To facilitate a bulk
Answer:
Trade Discount Vs Cash Discount
A discount given by the seller to the buyer as a deduction in the list price of the commodity is trade discount. A deduction in the amount of invoice allowed by the seller to the buyer in return for immediate payment is cash discount. Purpose. To facilitate a bulk sales.
Explanation:
A trade discount is one that is allowed by the wholesaler to the retailer, calculated on the list price of the product, whereas cash discount is allowed to stimulate instant payment of the goods purchased. The main difference between trade discount and cash discount is that ledger account is opened for a cash discount, but not for a trade discount.
Cash Discount is referred to as a discount, allowed to customers by the seller at the time of making the payment of purchases, as a reduction in the invoice price of the commodity. A cash discount is used by the sellers to facilitate a prompt payment and thereby to avoid the credit risk. Both the buyers and sellers keep a proper record of such discount in their books of accounts.