What is Difference Between Cash Discount and Trade Discount?

First

Trade discount is issued by deduction in list price.

Cash discount is issued by deduction in payable amount of debtors.

Second

Trade discount is given with the aim to purchase at high quantity.

Cash discount is given with the aim to get payment fastly and before payment date .

Third

Trade discount is shown as deduction in Invoice.

Cash Discount is not shown as deduction in Invoice.

Fourth

There is no any accounting treatment for trade discount.

There is accounting treatment for cash discount both in vendor and buyer’s day book.

Fifth

Trade discount is related to quantity of the goods purchased.

Cash Discount is related to the amount of payment but not to quantity of goods.

Sixth

There is no need to give cash discount with trade discount.

If seller has given trade discount, cash discount can be given after trade discount.