What is Discount ? Meaning
In uncomplicated terms, Discount is an allowance or concession inward price. Discount is given too thence that the buyer is induced (lured) to house an fellowship too afterwards to brand payment inward time.
Discount tin survive besides referred to equally a deduction inward price. The seller deducts the discount from the gross or full price, too the buyer is supposed to pay the internet amount.
Types of Discounts
The 2 kinds or types of discounts are :-
- Cash Discount
- Trade Discount
1. Cash Discount
Cash discount is an allowance or concession given past times the seller to the buyer. This discount is offered to encourage the buyer for quick payment or settlement. It is allowed for immediate payment of cash or payment inside a brusk period.
The cash discount is commonly shown inward the quotation too invoice. It is deductible from the full toll too the buyer is requested to pay exclusively to the internet amount. Cash Discount is usually stated inward the percent form.
2. Trade Discount
Trade Discount is a reduction inward the catalogue toll of the goods allowed exclusively if the quantity ordered past times the buyer is quite large. Its work is to encourage the buyer to brand volume purchases. It is allowed on cash equally good equally credit sales.
The merchandise discount is non shown inward the books of account. The merchandise discount is calculated equally to a greater extent than or less percent of the catalogue price. It varies according to the quantity of order.
