Distinguish Betwixt Merchandise As Well As Cash Discount - Difference

1. Meaning ↓

Trade Discount is a discount allowed past times the seller to the buyer inwards illustration of volume purchases made past times him.

Cash Discount is a reduction inwards the internet sum payable past times the buyer when prompt payment is made past times the buyer.

2. When Allowed?

Trade discount is normally allowed when volume purchases are made.

Cash discount is normally allowed if payment inwards cash is made promptly i.e. inside a brusk menses of time.

3. Purpose or Objective ↓

Trade discount's object is to attract bigger orders past times giving incentive to the buyer to purchase more.

Cash discount's role is to encourage the buyer to brand prompt payment.

4. How Calculated?

Trade discount is calculated equally a per centum of the catalogue price.

Cash discount is calculated equally a per centum of internet sum payable past times the buyer.

5. Variation inwards Rate ↓

Trade discount charge per unit of measurement varies according to the type together with quantity of goods purchased.

Cash discount varies according to the menses of payment.

6. Entry inwards the Books of Accounts ↓

Trade discount does non seem inwards the books of accounts.

Cash discount is recorded inwards the books of accounts.