What is the difference between Cash discount and Trade discount?

Thank you for calling thedifference between commercial deduction of cash discount:commercial discount: reduction granted by the seller and the buyer to urge him to purchase or purchase in large quantities. This deduction is not recorded in the books of the seller and the buyer books, where the value of the goods after the discount.The cash discount: reduction granted by the seller and the buyer to urge him to an early repayment records in the books of the seller as (the debtor) called Discount permitted. In the books of the buyer are recognized as revenue ( a creditor ) called acquired a 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 goods or services is cash discount.

A trading discount is a discount given by a seller to the buyer as a deductible in the list price -A cash discount is a deduction in the amount of invoice allowed by the seller to the buyer in goods or services

Trade discount is referred to as a discount, given by the seller to the buyer at the time of purchase of goods, as a deduction in the list price of the quantity soldCash 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.

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Key Differences Between Trade Discount and Cash Discount

Trade discount is given on the catalogue price of the goods while the cash discount is given on the invoice price.

Trade discount is granted with the aim of increasing the sales in bulk quantity, whereas Cash discount is granted to facilitate a quick payment.

Trade discount is allowed to all customers while the Cash discount is allowed to those customers, who purchase goods in cash.

In the case of Trade Discount, no entry is made in the books of accounts, while the proper entry is made in the books of accounts for the cash discount.

Trade discount is allowed at the time of purchase while the cash discount is allowed at the time when the payment is made.

 

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