Distinguish between trade discount and cash discount - Vidyadip

Question

Distinguish between trade discount and cash discount

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Answer

Difference between trade discount and cash discount is as follows.

No.	Cash discount	Trade discount
$1$	Cash discount is calculated on the net amount of a transaction.	Trade discount is calculated on the catalogue price or on the total value.
$2$	It is compulsory to record cash discount in the books of accounts.	Trade discount is not recorded in the books of accounts.
$3$	Cash discount is an expense or income for the business	Trade discount is not an expense or income for the business.
$4$	Cash discount is calculated when cash or cheque is received or given.	Trade discount is a general discount allowed to every customer.
$5$	Cash discount is allowed for the prompt or timely payment.	To increase the sell of goods or for any other reason trade discount is allowed.

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