Difference between Cash Discount and Trade Discount

Cash Discount and Trade Discount Difference; Market or business allows giving two types of discount first cash and trade. Maybe we want to know first what is a discount? A deduction from the usual cost of price or something else; typically given for prompt or advance payment or to a special category of buyers. A cash discount allows stimulating instant payment of the goods purchased; while a trade discount is one that allows the wholesaler to the retailer, calculated the list price of the product. The main difference between the cash discount and trade discount is that the ledger accounts open for a cash discount, but not for a trade discount; That’s mean the ledger of merchant account book is we allow cash discount add in book columns, but trade discount does not allow to add or entry on account book columns.

Discount is one of the easiest ways to increase sales and so boost profit, consumed by various traders, businessmen or businesswomen, and shopkeepers all around the world are to offer or proposal a discount. It is simply a reduction in the selling price of the goods; which not only attracts customers but also persuades them to make more selling. The Discount classifies as a cash and trade discount, depending on the option and selling of the product.