Question 11
Cash BookDate | Particulars | Folio | Details | Total
1/6/02 | 2 bags of maize | SL | 1,800 | 1,800
12/6/02 | 3 bags of salt less 5% discount | | 7,000 | 7,000
Total 8,800
The 5% discount shown above indicates
- A.trade discount
- B.cash discount
- C.discount allowed
- D.discount received.
Show the answer and explanation
Answer: A (trade discount)
Explanation
A discount deducted on the invoice at the time of sale, in a day book, is a trade discount, not a cash discount for prompt payment.