Entry for trade discount always appears in the books of account.

True

No worries! We‘ve got your back. Try BYJU‘S free classes today!

False

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Open in App

Solution

The correct option is B False
The discount allowed by a seller to its customers at a fixed percentage on the listed price of goods is termed as Trade discount.
No separate entry is passed for the Trade discount, as it is deducted from the cash memo or invoice of the goods.
If the goods sold at trade discount are returned by the customer, the amount of trade discount is again deducted from the list price of the returned goods. Generally, it is allowed to the retailers to enable them to sell the goods to their customers at list price.
The purpose is also to increase the sales.
It is not recorded in the books of accounts.

Suggest Corrections

2017
March 3		Bought goods for cash of the list price of ₹ 80,000 at 10% trade discount and 2 $\frac{1}{2}$ % cash discount.
5		Sold goods for cash of the list price of ₹ 1,00,000 at 15% trade discount and 3% cash discount.
6		Sold goods to Nagpal of the list price of ₹ 50,000 at 20% trade discount.
8		Nagpal returned one-fourth of the above goods.
10		Nagpal settled the account by paying cash under a discount of 5%.