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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Explain the differences between trade discounts and cash (sales) discounts.

To determine

Distinguish between the concept trade discount and the cash discount.

Explanation

Account receivable:

The amount of money to be received by a company for the sale of goods and services to the customers is referred to as account receivable.

Distinguish between the concept trade discount and the cash discount.

Trade discount:

  • A trade discount refers to reduction in the price by  the manufacturer to the  customer for the large  purchase made by  them or to  hide  the  original value  from the competitors.
  • These discounts are given as percentage of reduction of the list of price of a product and the transaction price must be specified with the amount the company is entitled to receive...

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