The accounting for cash discounts and trade discounts are

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Cash discounts are reductions in the amount payable if payment is made within a specific time period, whereas trade discounts are reductions in the list price of a product that are not based on prompt payment. The accounting treatment for these discounts is different, as cash discounts are credited to a discount account and trade discounts are simply not recorded in the accounting system.

The Accounting for Cash Discounts and Trade Discounts Are