ALLInterview.com :: Home Page            
 Advertise your Business Here     
Browse  |   Placement Papers  |   Company  |   Code Snippets  |   Certifications  |   Visa Questions
Post Question  |   Post Answer  |   My Panel  |   Search  |   Articles  |   Topics  |   ERRORS new
   Refer this Site  Refer This Site to Your Friends  Site Map  Bookmark this Site  Set it as your HomePage  Contact Us     Login  |  Sign Up                      
Google
   
 
Categories >> Accounting >> Audit
 
 


 

 
 Audit interview questions  Audit Interview Questions (427)
 CompanyAffairs CS interview questions  CompanyAffairs CS Interview Questions (158)
 Taxation interview questions  Taxation Interview Questions (1897)
 Accounting General interview questions  Accounting General Interview Questions (2805)
 Accounting AllOther interview questions  Accounting AllOther Interview Questions (4359)
Question
what is the difference between cash discount and trade
discount. 

what is the journal entry for purchase of 100000 giving 
(a) 5% trade discount 
(b) 5% cash discount.
 Question Submitted By :: Audit
I also faced this Question!!     Answer Posted By  
 
Answer
# 1
Trade Discount is the discount provided on bulk purchases
and generally trade discount is not shown in the books of
accounts the entry for purchase of 10,000 5% trade
discount is
Purchase A/c....Dr 9500
To Sundry Debtor/cash/bank A/c. 9500

Cash Discount is the discount provided for payments made
before due date and for cash purchases and this is gain to
the company and is shown in the books of accounts and the
entry will be
Purchase A/c....Dr 10000
To Discount Received A/c 500
To cash A/c 9500
 
Is This Answer Correct ?    121 Yes 12 No
Chanti
 
Answer
# 2
Trade Discount is the discount provided on bulk purchases
and generally trade discount is not shown in the books of
accounts the entry for purchase of 10,000 5% trade
discount is
Purchase A/c....Dr 9500
To Sundry creditor/cash/bank A/c. 9500

Cash Discount is the discount provided for payments made
before due date and for cash purchases and this is gain to
the company and is shown in the books of accounts and the
entry will be
Purchase A/c....Dr 10000
To Discount Received A/c 500
To cash A/c 9500
 
Is This Answer Correct ?    45 Yes 12 No
Chantihyd
 
 
 
Answer
# 3
Trade discount is not shown in accounting books but still it
is calculated and subtracted from the principle amount and
the remaining amount (result) becomes the principle amt at
which cash discount would be calculated and shown in the
accounting books:
Sol:
Given: Goods sold @100000
Therefore, TD= 100000*(5/100)=5000
Selling price= Principle amt - TD
= 100000 - 5000
= 95000
Now, CD would be applied on the above answer, i.e on 95000
Therefore CD = 95000 * (5/100)
= 4750
Cash Received = 95000 - 4750
= 90250
Journal Entries:
Purchase Goods A/C Dr 95000
---- To Cash A/C 90250
---- To Discount Received 4750

Hope the answer is right
 
Is This Answer Correct ?    33 Yes 7 No
Imran Malik
 
Answer
# 4
Trade Discount is the deduction granted by supplier towards
business consideration to increase the sales with bulk
qualtity of goods/services. Trade discount will never be
recorded in books of accounts, since it is given on invoice
copy. Trade discount is given to promote the sales.
The Cash Discount is the reduction granted by supplier for
encourage the prompt or Immediate payment.
The details are as follows.....
Total sales = 100000
Trade discount = 5% on 100000 = 100000*5/100 = 5000
The actual sales = 100000-5000 = 95000.
Cash Discount is 5% on 95000 = 95000*5/100 = 4750.
Now the entry for cash discount is: -

Purchases a/c DR 95000,
To Discount received a/c 4750,
To Cash/Bank a/c 90250.
(Being cash Discount received from purchaser)
 
Is This Answer Correct ?    19 Yes 2 No
Kasi Reddy
 
Answer
# 5
trade discount is given on the bulk purchase of the goods .
the entry for trade dist. is never passed in the books of
a/c.cash dist. is given for prompt payment of cash
the entry in the books of the purchaser :
Purchase A/C Dr. 9500
Discount A/C 475
Cash/Bank A/c 9025
 
Is This Answer Correct ?    19 Yes 11 No
Hitesh Jain
 
Answer
# 6
TD FOR INCRASE SALES BUT CD FOR RECEIVED PAYMENT EARLY 
Is This Answer Correct ?    9 Yes 3 No
Sohanbeer Singh
 
Answer
# 7
cash discount is given to the debtor with the aim to get
payment fastly whereas trade discount is given with the aim
ot purchase at high quantity
 
Is This Answer Correct ?    5 Yes 0 No
Puja
 
Answer
# 8
Trade Discount is the discount provided on bulk purchases
and generally trade discount is not shown in the books of
accounts the entry for purchase of 10,000 5% trade
discount is
Purchase A/c....Dr 9500
To Sundry Debtor/cash/bank A/c. 9500

Cash Discount is the discount provided for payments made
before due date and for cash purchases and this is gain to
the company and is shown in the books of accounts and the
entry will be

At The time of purchase

Purchase A/c.... Dr 10000
To Sundry Creditors A/c 10000


At The Time Of Payment Before Due.

Sundry Creditors A/c Dr. 10000
To Discount Received A/c 500
To Cash 9500
 
Is This Answer Correct ?    5 Yes 1 No
Sreejith As
 
Answer
# 9
At The time of purchase (@5% Trade Discount)

Purchase A/c.... Dr 9500
To Sundry Creditors A/c 9500


At The Time Of Payment Before Due (@5% Cash Discount).

Sundry Creditors A/c Dr. 9500
To Discount Received A/c 475
To Cash 9025
 
Is This Answer Correct ?    4 Yes 0 No
Sreejith As
 
Answer
# 10
let me explain u ..

Trade Discount is the discount provided on bulk purchases or at the tym of purchase.
and generally trade discount is not shown in the books of accounts.

now the entry at the tym of purchase 1,00,000.
without trade discount.

Purchase A/c....Dr 100000
To vendor A/c cr 100000

and now at the tym of 5% trade discount the entry would be



Purchase A/c....Dr 95,000
To vendor A/c cr 95,000

nw see that genreally trade discount is not shown in books of account.
only amount will be effected.


Cash Discount is the discount provided for payments made
before due date and for cash purchases and this is gain and
the company is shown in the books of accounts.
so nw we to pay to vendor 90500
and cash discount received is 5 %
so the entry will be


vendor A/c....Dr 95,000
To Discount Received A/c 4,750
To cash A/c 90,250.

nw the payment made to vendor is Rs 90,250.
 
Is This Answer Correct ?    2 Yes 0 No
Aman Chhabra
 

 
 
 
Other Audit Interview Questions
 
  Question Asked @ Answers
 
If there is a partnership firm, can we give more than Rs. 20,000/-cash in a single day to partner?   4
Expand---------MRPS   2
What is Asset Revaluation? and when it is required? UBS 3
if bill has came for payment for car repair purpose in bill they mentation total parts value is 21000 and labour 13000 with total of 34000 inthat on parts vat is include so we have to deduct tds u/s 194c @2% on full amount of 34000 or not(bill is single for whole 34000 purpose_ Maruti-Suzuki 3
What is the importance of Stock Audit, Accounting Audit   1
what is the tds rates for deduction by a private ltd. company with effect from 1st oct.09   2
what is rate of tds in present financial year HP 4
Audit evidence obtained directly by the auditor will not be reliable if: A) the auditor lacks the qualifications to evaluate the evidence. B) it is provided by the client's attorney. C) the client denies its veracity. D) it is impossible for the auditor to obtain additional corroboratory evidence.   2
When does contruction company issues C Form to their supplier in case of CST Purchase.   4
1)how will you check the expenses? Pantaloon 12
What is meant by Perk?   3
internal checksystem   3
 
For more Audit Interview Questions Click Here 
 
 
 
 
 


   
Copyright Policy  |  Terms of Service  |  Articles  |  Site Map  |  RSS Site Map  |  Contact Us
   
Copyright 2013  ALLInterview.com.  All Rights Reserved.

ALLInterview.com   ::  KalAajKal.com