Trade and Cash discounts

Trade and Cash discounts

Image credit seawaytrail.com

Image credit seawaytrail.com

ZIMSEC O Level Commerce Notes: Retail Trade: Trade and Cash discounts

Trade discount

  • a gross deduction from the gross invoice or catalog price
  • given by one trader to another
  • varies with the quantity and type of goods purchased and is deducted at the point of sale
  • usually the rate is high
  • not recorded in the books of accounts
  • encourages customers to buy from a particular source

Cash discount

  • an allowance from the net invoice price given to any customer who pays promptly
  • deducted when the payment is made
  • rate is usually lower than that of Trade discount
  • encourages early payment of debts
  • may increase the rate of stock turn
  • helps reduce the trader’s bad debts
  • saves clerical work due to early payment
  • recorded in the books of accounts

To access more topics go to the Commerce Notes page.

By |2017-01-17T11:20:51+00:00July 4th, 2015|Notes, O Level Commerce Notes, Ordinary Level Notes|Comments Off on Trade and Cash discounts

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He holds an Honours in Accountancy degree from the University of Zimbabwe. He is passionate about technology and its practical application in today's world.
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