Archive about 'Trade Discounts & Cash Discounts'

Cash Discount And Its Notation

Tweet I saw on my supplier invoice with a notation of “ 2/10,n/30 ” . What does this mean? Answer: Some companies offer their customers an incentive to get them to pay their bills faster. This is called a cash discount. See earlier article on the difference between cash discount and trade discount When the […]

Difference/Distinction Between Cash Discount And Trade Discount

Tweet In earlier articles, these two terms have been discussed. Tabulated below for easy reference, salient points of the difference/distinction: Cash Discount Trade Discount Is a reduction granted by supplier from the invoice price in consideration of immediate or prompt payment Is a reduction granted by supplier from the list price of goods or services […]

Accountancy Mathematics: Cash Discount (Part 3 of 3)

Tweet This is the final part of Cash Discount which dealt with: Taking Advantage Of Cash Discount on Partial Payment of Invoices PARTIAL PAYMENT OF INVOICE & IMPACT ON CASH DISCOUNT Very simply, if a buyer pays part of the invoice within the discount period, he can only be entitled for proportionate fraction of the […]

Accountancy Mathematics: Cash Discount (Part 2 of 3)

Tweet This is the second part of a series of 3 articles on Cash Discount which dealt with the use of borrowings to pay to take advantage of Cash discount BORROWING TO TAKE ADVANTAGE OF CASH DISCOUNT. ILLUSTRATION 1 Mr A bought some goods valued at $100,000 with a cash discount terms of 5/10, n/60. […]

Accountancy Mathematics: Cash Discount (Part 1 of 3)

Tweet As discussed in my earlier basic financial accounting article: Cash discount is an allowance/reduction on the amount due by the customers when they pay their bills within a stipulated period of time; This is to encourage prompt payment of bills; The credit terms which comprise the cash discount rate and the credit period are […]

Accountancy Mathematics- Trade Discount

Tweet In my earlier accounting article, I have mentioned about trade discount, cash discount, mark-up and down. This article discussed the accountancy mathematic applied for trade discount: Basics: (a) Trade Discount = List Price less Net Price (b) Amount of trade discount = List price x trade discount rate ILLUSTRATION 1 The list price of […]