Sir/Mam,
I am a student of class 11 and am interested to know about Trade discount. Please satisfy me by giving me some information or links for further study.
You can follow this link. It has useful information.
2 Replies
CA Kushwanth AVSR
(CA in Practice CMA by Qualification)
(1593 Points)
Replied 25 September 2020
Generally discounts are of two types:
1. Cash Discount
2. Trade Discount
Cash Discount will be given to the customer by supplier at the time of payment or any time after entering the contract with the customer
Whereas Trade Discount will be given to the customer by supplier at the time of entering the contract itself
For Example, the price of the product say Rs. 100/- and the supplier wants to give discount of Rs. 10/-
If the Supplier gave discount at the time of entering the contract itself then the contract value will be Rs. 90/- only as both the parties know that there is only a need to pay Rs. 90/- only. So, in the books of accounts purchase will be recorded at Rs 90/-
If the Supplier gave discount after entering the contract then at the time of entering into contract the value of the contract will be Rs. 100/- and after some days supplier might give customer the discount of Rs. 10/- for whatever the reason it might be. Here, at the time of contract purchase will be recorded with Rs. 100/- and when discount is received, it will be shown as income of Rs. 10/-.
I think this will give you sufficient information.
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