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Cash discount and trade discount

Harshit Sardana (44 Points)

06 June 2020

are cash discount and trade discount really different in practical world? or just the same..

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4 Replies

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 06 June 2020

Cash discount is for cash transactions.

Trade discount s for credit transactions.

3 Like

Amit Jain (42 Points)
Replied 07 June 2020

Yes both are different in practical world as well.
Trade Discount - Entities usually provide for bulk purchases
Cash Discount - For early payment

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Harshit Sardana (44 Points)
Replied 07 June 2020

So on what amount we book the entry? after trade discount or after cash discount ?

Amit Jain (42 Points)
Replied 07 June 2020

Trade discount you may receive at the time of purchase or after a duration as credit note, in both the situation you need to reduced the purchase price if you are receiving the trade discount and cash discount always credit to profit and loss account