why is trade discount not mentioned on journal and why the original price without reducing is not mentioned in the journal
Answers
Explanation:
Why trade discount is not recorded in the books of accounts, whereas cash discount is recorded?
What's a day in the life of a finance worker like?
Trade Discount
1. A trade discount is the reduction granted by a supplier of goods/services on the list or catalog prices of the goods supplied.
2. It is provided due to business consideration such as trade practices, large quantity orders, etc.
3. Trade discount is not separately shown in the books of accounts, and all amounts recorded in a purchases or sales book are done in the net amount only.
4. Trade discount is allowed on both credit and cash transactions.
5. Trade discount is given on the basis of a purchase.
Explanation:
trade discount is not recorded in the books of accounts because it's not an actual discount.
it is given on the actual price of the product not on the market price.it happens before booking and as no transaction is done it is not recorded.
and i think there is some misunderstanding because in journal trade discount is deducted from the actual amount and then it is recorded.
just check it once.