Answer:

Trade discount is referred to as a discount, given by the seller to the BUYER at the time of PURCHASE of goods, as a deduction in the list price of the quantity sold. The trade discount is used by the sellers to attract more CUSTOMERS and increase the quantity sales. There is no record maintained in the books of both the buyer and seller for such a discount.

Cash Discount is referred to as a discount, allowed to customers by the seller at the time of making the payment of purchases, as a reduction in the invoice price of the commodity. A cash discount is used by the sellers to FACILITATE a prompt payment and thereby to avoid the credit risk. Both the buyers and sellers keep a proper record of such discount in their books of accounts.

A trade discount is one that is allowed by the wholesaler to the retailer, calculated on the list price of the product, whereas cash discount is allowed to stimulate instant payment of the goods purchased. The main difference between trade discount and cash discount is that ledger account is opened for a cash discount, but not for a trade discount.

One of the easiest ways to increase sales and so boost profit, used by various traders, businessman, and shopkeepers all around the world, is to offer 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 sales. It is classified as trade discount and cash discount.

The article excerpt presented to you will help you learn some more differences, take a read.

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hope it helps

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