TRADE DISCOUNT, CASH DISCOUNT AND REBATE IN ACCOUNTING EXPLAINED.

TRADE DISCOUNT, CASH DISCOUNT, AND REBATE IN ACCOUNTING EXPLAINED.

Transcript

00:00I bet you didn't know there are different types of discounts when you shop.

00:04Let's dive into trade discounts, cash discounts, and rebates.

00:08Discounts are reductions in price.

00:09Simple, right?

00:11There are two main types.

00:13Trade discounts and cash discounts.

00:16Trade discount.

00:17This is a price cut given by the seller when you buy a certain amount or value of goods.

00:21It's like a thank you for buying in bulk.

00:24Sales and purchases are recorded at the net value, meaning the discounted price.

00:28The discount itself isn't shown in the books.

00:30Now, on to cash discounts.

00:32This is a price cut given for paying your bill on time.

00:35It's an expense for the seller and income for the buyer.

00:39Unlike trade discounts, cash discounts are recorded separately in the books.

00:44Finally, rebates.

00:46These are price reductions given after the sale, often for reasons like poor quality.

00:51It's a way for sellers to make up for any issues.

00:54And that's it.

00:55Now you're a discount pro.

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