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WHY trade discounts not recorded in the books of account?

why cash discount is always  recorded in the bookes of account and trade discount is not recorded , as per the Law all expenses and losses are debited but y in the case of trade discount it is not applicable ??

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Question added by ANOOP NIRAVAMKUNNATH SEKHARAN , ACCOUNTS MANAGER , FITOUT GROUP
Date Posted: 2015/04/28
Ahmed Abdi Mahad
by Ahmed Abdi Mahad , Director of Internal Auditing Directorate , Jigjiga University

Because trade discount is not an actual discount that granted by the seller or received by the purchaser. Rather it is a discount deducted from a list price (offered price) to arrive the actual selling price. In other words, it is a discount made to the purchaser before the actual transaction was made

So, since no transaction is made during the trade discount there is no need to record in the book of neither party (the seller or the purchaser). 

 

 

Muhammad Zohaib
by Muhammad Zohaib , Operations Manager , Meezan Bank Limited

In case of Cash Discount, as you have already booked the actual Sale Price so you must book the discount as well to show the loss/expense. Trade Discount isn't recorded because it happens even before booking the Sales amount.

Jahanzeb Pirzada
by Jahanzeb Pirzada , Data Operator , Citibank N.A

Trade Discount isn't recorded because it happens even before booking

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