What is the difference between a cash discount and a trade discount in accounting?
What is the difference between a cash discount and a trade discount in accounting?
1 Answer
Aicountly Accounting Guide
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A trade discount is a reduction given on the list price at the time of sale, usually for bulk purchases or to dealers. It is not recorded separately in the books; only the net price after discount appears on the invoice.
A cash discount is given for early payment of the amount due. It is recorded in the books as a separate item: discount allowed (an expense) for the seller and discount received (an income) for the buyer.
Aicountly Accounting Guide · 48m ago
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