Distinguish Trade Discount from Cash Discount. (Two points)

Question

✓

Answer

Difference Among Trade Discount and Cash Discount:

No.	Basis	Trade Discount	Cash Discount
1.	Nature	It is allowed on sale or purchase of certain quantity.	It is allowed on payment being made on or before a certain date.
2.	Nature of Transaction	It is allowed on both cash and credit sales or purchase.	It is allowed only on payment.
3.	Recording	Trade discount is not recorded separately in the books of account.	Cash discount is recorded separately in the books of account.
4.	Deduction from Invoice	The amount of the trade discount is deducted from the invoice.	It is not deducted from the invoice.

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Purchases Book total had been undercasted by ₹ $20,000.$
A cheque received from Vasudev for ₹ $7,800$ had been debited in the Cash Book but not posted in Vasudev’s Personal Account.
Returns Outward Book had been overcasted by ₹ 10,000.
Goods returned by Yash Pal worth ₹ 15,000 have been entered in Returns Outward Book. However, Yash Pal’s Account is correctly posted.

S.no		₹
(i)	Gopinath started business with cash	25,000
(ii)	Purchased goods from Shyam	10,000
(iii)	Sold goods to Sohan costing ₹ 1,800	1,500
(iv)	Gopinath withdrew from business	5,000

A cheque for ₹ 5,000 drawn in favour of Manohar has not yet been presented for payment.
A post-dated cheque for ₹ 900 has been debited in the bank column of the Cash Book but it could not have been presented in any case.
Cheques totalling ₹ 10,200 deposited with the bank have not yet been collected and a cheque for ₹ 4,000 has been dishonoured.
A bill for ₹ 10,000 was retired by the Bank under a rebate of ₹ 150 but the full amount of the bill was credited in the bank column of the Cash Book.

2019
Jan. 6	Purchased goods from Henry for ₹ 50,000 on 10% trade discount and 4% cash discount and paid 60% amount by cheque.
Jan. 15	Bought goods from Amit for ₹ 2,00,000 at terms 5% cash discount and 20% trade discount. Paid $\frac{3}{4}\text{th}$ of the amount in cash at the time of purchase.
Jan. 18	Sold goods to Sherpa at the list price of ₹ 50,000 less 20% trade discount and 4% cash discount if the payment is made within 7 days. 75% payment is received by cheque on Jan. 23rd.
Jan. 25	Sold goods to Garima for ₹ 1,00,000, allowed her 20% trade discount and 5% cash discount if the payment is made within 15 days. She paid $\frac{1}{4}\text{th}$ of the amount by cheque on Feb. 5th and 60% of the remainder on Feb. 15th in cash.