Define Cash Discount & Trade Discount
Cash Discount is a type of discount given by the supplier or seller to the buyer to receive prompt payment.
Trade Discount is a type of discount given by the seller to the buyer from the list price allowed by the wholesaler to the retailer.
Difference between Cash Discount & Trade Discount
|Cash Discount Account is opened in the ledger.||Trade Discount account is not opened in the ledger.|
|Cash discount is granted by the supplier in the consideration of instant payment.||Trade Discount is granted by the supplier from the list of goods or services on consideration of business.|
|It is allowed on payment of money.||It is allowed on purchase of goods.|
|It is not shown in the invoice.||It is shown by the way of deduction in the invoice.|
|It encourages prompt payment.||It is allowed to encourage the sales.|
|This discount varies with the time period within which payment is received.||This discount varies with the quantity of goods purchased.|