What is difference between trade discount and cash discount? Explain in easy language?

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Answer

Trade discount and cash discount are two different types of discounts that are often offered by businesses to their customers.

A trade discount is a reduction in the price of a product or service that is offered to customers who are purchasing goods for resale or for use in their own business. Trade discounts are typically offered to wholesalers, retailers, or other businesses, and are often based on the volume of goods being purchased or the terms of the trade agreement between the buyer and the seller.

A cash discount, on the other hand, is a reduction in the price of a product or service that is offered to customers who pay for their purchase in cash. Cash discounts are often offered as an incentive for customers to pay for their goods or services immediately, rather than waiting to pay at a later date. They are typically offered to consumers, and are often based on the amount of the purchase or the payment terms agreed upon by the buyer and the seller.

Overall, the main difference between trade discount and cash discount is that trade discounts are offered to businesses, while cash discounts are offered to consumers. Trade discounts are based on the terms of the trade agreement, while cash discounts are based on the payment terms and the amount of the purchase.

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