Which discount is never shown in the accounting books?
ACash discount
BTrade discount
CBoth cash and trade discount
DNone of the above
Answer:
B. Trade discount
Read Explanation:
DISCOUNT
Discount is a rebate or deduction allowed either on the selling price of a product/services or on the amount due.
Discount may be trade discount or cash discount
Trade Discount
When goods are purchased in bulk quantities, the seller may give certain concession on the listed price to the buyer. This concession is called trade discount.
Trade discount encourages the customers to buy more.
Trade discount recorded in the books of account as it is deducted in the invoice (bill) itself.
Example :
Purchased goods wort Rs 50,000 from Rajan at a trade discount of 10%. Here value of purchase is recorded as Rs. 45,000 (50000-5000). Therefore trade discount Rs.5000 never recorded in the books of account.
