What do you mean by discount? Explain the types of discount.

Asked by Topperlearning User | 14th Jun, 2016, 05:30: PM

Expert Answer:

When a reduction in the amount is allowed in order to encourage more purchase or to have an on time payment is referred to as discount. Discount are classified as:

  1. Trade discount: The discount which is allowed when purchases are made in large quantity is known as trade discount. It is allowed as deduction from the sale value and the sale is recorded at a new amount. This is called sale less trade discount.
  2. Cash discount: The discount which is allowed by the supplier for immediate payment or before the due date is known as cash discount. It is usually allowed as a percentage of the amount received.

Answered by  | 14th Jun, 2016, 07:30: PM