Trade discount is recorded in the books of accounts.

Monjur Alahi

State whether the following statements are True or False with reason:

Trade discount is recorded in the books of accounts.


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Salim Ahmed Kawsar

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This statement is False.

Correct statement: Trade discount is never recorded in the books of accounts. Reasons: The discount which is allowed or given by the manufacturer to wholesalers and by wholesalers to retailers and retailers to customers on the bulk purchases is called trade discount. By custom or by law trade discount is calculated on the catalog or printed price of the goods. Trade discount is directly deducted from the printed price and net prices of the goods or services are recorded in the books of accounts. A trade discount is given to encourage the buyers to increase their purchases. It is given to traders to enable them to earn a sizeable profit on the printed prices.

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