DISCOUNT
- DISCOUNT - Allowance or concession given by the seller of goods to the customer
- Usually given to encourage customers to make prompt payments and establish a business relationship
TRADE DISCOUNT
- Trade discount is allowed at the time of the purchase
- Generally given by whole-sellers to retailers
- NOT recorded in books of accounts
CASH DISCOUNT
- Concession given to encourage prompt payment
- cash discount is the normal discount
- Cash discount is considered as a loss to the receiver of the cash
- whenever cash discount is given , Discount allowed account should always be debited as an expense in journal book
- Calculated after deducting trade discount
- given ON invoice price at time of payment
- IT IS recorded in the books of accounts