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Difference between trade discount and cash discount

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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.

 

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