Distinguish, differentiate, compare and explain what is the difference between Cash Discount and Trade Discount. Comparison and Differences.
Differences between Cash Discount and Trade Discount
| S.No. | Cash Discount | Trade Discount |
| 1 | In cash discount method buyers are allowed to make payment at an early date. | In trage discount, encourages buyers to buy goods in larger quantities. |
| 2 | Cash discount is more related to time. Earlier the buyer do payments more will be the cash discounts in favour. | Trade discount is generally related to the quantity of purchase or sale. More the buyer purchases, more will be the deduction rate and amount of discount. |
| 3 | Cash discount is allowed by the seller or creditor to the buyer or debtor at the time of making payment. | Trade discount is allowed by the seller to the buyer when the goods are sold. |
| 4 | Cash discount is recorded in the books of account. | Trade discount is not recorded in the books of account. |
| 5 | It is shown in the debit side of the cash book. | No journal entry is made for it. |
| 6 | Cash discount received is shown on the credit side of the cash book. | Its details are just shown in the purchases or sales book. |
| 7 | Cash discount is not deducted from the invoice value of goods. | Trade discount is deducted from the list price of the goods. |
Tags:
Difference between Trade Discount vs Cash Discount
Cash Discount vs Trade Discount
Differences between Trade Discount vs Cash Discount
