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    Question

    Trade Discount is not recorded in the books.

    A

    True

    B

    False

    Medium Open in App Solution Verified by Toppr

    Correct option is A)

    Trade Discount is allowed as a general discount to all the customers to promote the sales. Trade discount is allowed on the list price and sales is done on the basis of net price i.e. list price minus trade discount. Hence trade discount is not recorded in books of account.

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    स्रोत : www.toppr.com

    State whether the following statement is True or False with reasons.Trade discount is recorded in the books of accounts.

    State whether the following statement is True or False with reasons.Trade discount is recorded in the books of accounts.

    Advertisement Remove all ads MCQ True or False

    State whether the following statement is True or False with reasons.

    Trade discount is recorded in the books of accounts.

    OPTIONS

    True False Advertisement Remove all ads

    SOLUTION

    This statement is False. 

    Trade discount is a general discount, allowed on catalog price or on the price list price. For increasing the sale or to give sufficient margin to retailers, generally trade discount is allowed. Therefore, the trade discount is not to be recorded in the books of accounts.

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    स्रोत : www.shaalaa.com

    Why trade discount is not recorded in the books of accounts, whereas cash discount is recorded?

    Answer (1 of 3): Trade Discount 1. A trade discount is the reduction granted by a supplier of goods/services on the list or catalog prices of the goods supplied. 2. It is provided due to business consideration such as trade practices, large quantity orders, etc. 3. Trade discount is not separa...

    Why trade discount is not recorded in the books of accounts, whereas cash discount is recorded?

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    Sort Mitesh Tilokani

    M.B.A. (Fin.)Author has 365 answers and 850.4K answer views6y

    Trade Discount

    1. A trade discount is the reduction granted by a supplier of goods/services on the list or catalog prices of the goods supplied.

    2. It is provided due to business consideration such as trade practices, large quantity orders, etc.

    3. Trade discount is not separately shown in the books of accounts, and all amounts recorded in a purchases or sales book are done in the net amount only.

    4. Related questions

    Why is trade discount not recorded?

    How do you distinguish between trade discount and cash discount?

    What is the difference between cash discount and trade discount?

    How do you record a trade discount and cash discount?

    Is a cash discount recorded in a purchase book?

    Brian Skewes

    Technologist at Leap Forward TechnologiesAuthor has 874 answers and 88K answer viewsMay 18

    According to Finance Strategists, trade discount is a rebate or allowance from the listed price granted by the seller to the buyer at the time of selling goods. It is a discount which is given on the listed price and no entry is made for this type of discount. Journal entry is made after deducting the amount of trade discount from the listed price of goods purchased or sold.

    Cash discount is a rebate or allowance from the amount due granted by the creditor to the debtor at the point when the debtor makes payment before the due date.

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    Subham Mazumder

    Teaching Students of classes 11 and 123y

    As per AS 9 “revenue recognition”, Sales should be shown net of trade discount.

    So we are bound to follow this :)

    Learn more from here:

    Ron Auerbach

    Degrees in: economics, finance, accounting, human resourcesAuthor has 8.2K answers and 9.7M answer views1y

    Related

    How do I calculate a sales discount in accounting?

    This is something I would teach students in my accounting classes. You’d multiply the sale amount (not including freight and taxes) by the cash discount. For example, you buy $1000 worth of merchandise that has a 2% cash discount if you pay within 30 days of the invoice date. You make the payment 25 days after the invoice date. So on the seller’s end, they’d record it as follows:

    Debit Cash $980 for the amount the customer had paid

    Debit Sales Discount for the $20 cash discount they had given the customer

    Credit Accounts Receivable for the $1000 the customer had owed

    This way, you zero out the c

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    Related

    Why is trade discount not recorded?

    Trade discount is a discount offered by the supplier or seller for purchase if higher quantities of the good.

    This is a discount that is offered at the time of purchase.

    The amount of trade discount is not included in the billed amount.

    Any transaction that is recorded in the books should b backed by an evidence. In case if a trade discount, only the discounted values is shown in the bill.

    Hence it is not recorded.

    Abhishek Ganahari 5y Related

    What about trade discounts and cash discounts after GST?

    Taxability of discounts under GST has been a point of confusion in the industry despite the law being very clear on the issue.

    GST law does not distinguish between trade discounts, cash discounts, volume/turnover discounts, etc.. Instead, it classifies discounts into:

    Discount given before or at the time of supply, and

    Discount given after the supply has been effected.

    The treatment and taxability in both these cases are as below:

    Discount given before or at the time of supply: Such discount will be allowed as deduction from the value of supply if it is recorded in the invoice.

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