Key Differences Between Trade Discount and Cash Discount1. Trade discount is given on the catalogue price of the goods while the cash discount is given on the invoice price.
2. Trade discount is granted with the aim of increasing the sales in bulk quantity, whereas Cash discount is granted to facilitate a quick payment.
3. Trade discount is allowed to all customers while the Cash discount is allowed to those customers, who purchase goods in cash.
4. In the case of Trade Discount, no entry is made in the books of accounts, while the proper entry is made in the books of accounts for the cash discount.
5. Trade discount is allowed at the time of purchase while the cash discount is allowed at the time when the payment is made.
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