Question

Distinguish between Cash Discount and Trade Discount?

Answer 1

Trade Discount Vs Cash Discount

$\begin{array}{cc}\text{Trade Discount}& \text{Cash Discount}\\ 1.\text{It is allowed when a certain quantity is}& 1.\text{It is allowed when payment is made within}\\ \text{Purchased.}& \text{certain period.}\\ 2.\text{It is allowed to increase the sales}& 2.\text{It is allowed to get prompt payment from}\\ & \text{customer.}\\ 3.\text{It is deducted from the invoice itself.}& 3.\text{It is not deducted from the invoice.}\\ 4.\text{It is not reduced in the books of acounts}& 4.\text{Cash discount allowed and received both}\\ \text{or ledger accounts.}& \text{are recorded in their ledger accounts.}\end{array}$