Sep 8, 2019
Trade Discount and Cash Discount Explained
Discounts - Discounts are of two types -
(a) Trade Discount. Trade discount means the discount given to the customer/purchaser on the printed price of the product. For example, if the printed price of a particular product is Rs.10,000/- and it is sold for Rs. 8,000/- by the firm, then Rs.2000/- is considered as a trade discount.
(b) Cash Discount - It means discount offered to someone for making a prompt payment or payment before the date on which the amount is due. It acts as an incentive for the customers/purchasers of the firm to make early payments to the firm.