Trade discount differ from cash discount in the following ways.
|Key Differences between|
|Trade Discount||Cash Discount|
|Trade discount is merely a device to determine the price.Sales are invoiced at the net price after deducting the trade discount||Cash discount is the deduction from the net Invoice price.|
|Trade discount is allowed by the whoesalers to the retailers to enable the retailer to sell the goods to the consumers at the list price and still leave a margin of profit.||But Cash Discount is allowed by a creditor to his debtor to induce him to make prompt payment.|
|Trade discount usualy varies with the quantity of goods purchased.||While cash discount varies with the time within which the debt is paid.|
|Trade discount is not recorded in the books of account.||cash discount must be recorded in the books of accounts.|