Trade Discount & Cash Discount

7 三月

TRADE DISCOUNT

1. 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.

2. Not entered in the accounting records. 

3.  Not considered to be a part of the sale because the exchange agreement was based on the reduced price level. 

4. Allowed to promote the sales.

5. Shown by way of deduction in the invoice itself.

 6. Not opened in the ledger.

7. Allowed on purchase of goods.

8. May vary with the quantity of goods purchased or amount of purchases made.

CASH DISCOUNT  i.e Discounts Allowed (dr) and Discounts Received (cr)

1. A reduction granted by supplier from the invoice price in consideration of immediate or prompt payment.

2. An incentive in credit management to encourage prompt payment.

3. Not shown in the supplier bill or invoice.

4. Opened in the ledger.

5. Allowed on payment of money.

6. may vary with the time period within which payment is received.

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