BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cash Discount
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Cash & trade discount
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Trade Discount
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Loan
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Detailed explanation-1: -Trade Discount is provided to increase sales in bulk quantity, while Cash Discount is given to the customers to encourage early and prompt payment. Trade discount is allowed on both cash and credit transactions. In contrast, a cash discount is allowed to the customers only on cash payments.
Detailed explanation-2: -Cash discounts refer to a discount that a seller offers to a buyer in return for paying a bill before the maturity of the due date. Trade Discount is a reduction of amount from the list price of the goods, which the trader allows to the customer at a given rate.
Detailed explanation-3: -Trade discount is executed when a buyer is initiating a buy order. A cash discount is executed when the buyer initiates payment.