IGCSE Accounting Paper-1: Specimen Questions with Answers 153 - 154 of 341
Question 153
Question MCQ▾
Anwar sells goods with a list price of $ 6000 on cash to John. Anwar offers the following discounts.
Cash discount 20%
Trade discount 10%
Choices
Choice (4) | |
---|---|
a. | $ 6000 |
b. | $ 5400 |
c. | $ 5000 |
d. | $ 4800 |
Answer
b.Explanation
Cash discount is allowed on the purchase of goods. Trade credit is allowed when payment is made with in the specified period of time. Cash discount is allowed in order to encourage the customers to pay amount before expiry of the credit period.
Question 154
Write in Short Short Answer▾
Differentiate between cash discount and trade discount.
Cash discount | Trade discount |
(i) | (i) |
(ii) | (ii) |
(iii) | (iii) |
Explanation
Cash discount | Trade discount |
(ii) The amount of payment is considered in cash discount. | (iii) The quantity of goods purchased is considered in trade discount. |
(iv) Accounting treatment will be provided by both the vendor and buyer՚s day book. | (iv) No accounting treatment |
(v) The deduction of cash discount is not shown in the invoice. | (iv) The deduction of cash discount is shown in the invoice. |
Cash discount is given to the customer when the payment is made to the trader. The trade discount will be provided for the prompt payment of the customer who purchased the goods from the trader on credit.