TRADE DISCOUNT, CASH DISCOUNT AND REBATE IN ACCOUNTING EXPLAINED.

  • 2 days ago
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.
00:57Subscribe for more quick finance tips.

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