Trade Bill

Accomodation Bill

Arises from an indebtedness arising from the purchase of goods or taking of a loan

Is drawn and accepted only for providing funds to one of the parties or both the parties of the bill

On discounting a trade bill, full amount is retained by the drawer

Shared in an agreed ratio between the drawer and drawee

Consideration is present in the trade bill

No consideration is present

Acts as evidence of indebtedness

Acts as a source of finance

In order to recover the debts, the drawer can initiate legal action

Legal remedy for the recovery of amount is not available for immediate parties.

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 on business consideration re: buying in bulk for goods and longer period when in terms of services

As an incentive in credit management to encourage prompt payment

Allowed to promote the sales

Not shown in the supplier bill or invoice

Shown by way of deduction in the invoice itself

Cash discount account is opened in the ledger

Trade discount account is not opened in the ledger

Allowed on payment of money

Allowed on purchase of goods

It may vary with the time period within which payment is received

It may vary with the quantity of goods purchased or amount of purchases made