Chapter 4, Problem 6DQ

To determine

Cash Discount:

It means a discount which is given by entity to its customers to motivate them to make cash payment within a specified time. The seller of the product often refers to it as a sales discount and buyer often refers to it as a purchase discount.

Trade Discount:

It means a discount which is given by the entity to its customers by reducing the retail price of the product when it sells to a reseller, rather than to end user. This discount is basically given by a wholesaler.

To explain: Difference between cash discount and trade discount and also the trade discount received on purchased product to be recorded or not.