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Trade discount is the discount which is in actual sale price of unit at the time of sales and never shown in books of accounts. Cash discount is the discount in value of accounts receivable after sales completed.
Trade Discount are considered cost of sales/reduction in sales dependant upon who the customer is. Cash Discount is always considered Increasing Interest Expense/Reduction of Interest Expense, dependant upon who the recipient is.
Cash discount is the discount in amount in accounts payable while trade discount is on sales price discount which is not recorded in business books and transaction is recorded at discount price.
Trade discount is not shown any where in accounts as cash is received with discounted amount and sales also shown with reduced price.
What is the basis of prompt payment discount for sales with trade off invoice discounts? Is it before off invoice discount or after the off invoice discount?
quantity discount and trade discount are the same thing. it is used when the dealer wants to sell in bulk. while cash discount is given when he wants prompt payment.
Discount a/c Dr 20 Raman Industries Dr 80 To Sales 100 (Sales book & discount given )
a single trade discount is just that one trade discount.
I think the discount comes first and then the sales tax.
Debit accounts receivableCredit sales revenue
Cash discounts are received on cash sales. The seller or provider often refers to the cash discount as a sales discount.
A sales discount account is a contra-revenue account.