Accounts

The seller would not record a trade discount in the accounting records. Instead, it would only record revenue in the amount invoiced to the customer. If the seller were to record the retail price as well as a trade discount on an invoice to a reseller, this would create an unusually high gross sales amount in the income statement that might mislead any readers of the financial statements into thinking that the manufacturer has higher sales volume than is really the case (despite the presence of a large sales deduction for the trade discount)