Difference Between Discount and Rebate

Differences between Discount and Rebate

The Difference Between Discount and Rebate: these terms are normally used interchangeably in the market but these both terms are different from each other in nature but used for the same purpose i.e. used for the cut in the price of the goods. So, to know the Difference Between Discount and Rebate, First of all, we have to clear the meaning of both terms. These are explained below: 

Meaning of Discount: –

The Discount is that amount which is granted by the seller of the goods and services to its buyer. It is granted for mainly two purposes i.e. for promoting the sale of goods or for receiving earlier payments. On the basis of these purposes, this term has divided into two forms, shown as below:

  1. Trade discount
  2. Cash Discount

1. Trade discount: –

Trade Discount means that amount of cut in the list/dealer price of goods which is granted by the seller to the buyer at the time of the deal. It is not shown in the account, Because It is granted before actual sale arise.

2. Cash Discount: –

Cash Discount means that amount of cut from the total amount of the payment receivable from the creditor or cut from the total amount of the payable to debtors. It is granted by the receiver to get earlier payment of the outstanding amount. It has shown in the books of account Because Cash Discount is granted after the actual sale is done.

To know the details about the Expenses, Please check out the following link: –

Difference Between Trade Discount and Cash Discount

Meaning of Rebate: –

The Rebate is that amount which is granted by the seller of the goods and services to its buyer at the time of defect detected in the goods. It is granted for giving relief to the buyer.  The defect may be of the following type:-

  • Goods are not according to the sample.
  • The difference in the design of the product provided by the Buyer.
  • Shortage in the Quantity.
  • Delay in the Supply, Etc.

Chart of Difference between Discount and Rebate: –

Basis of Difference

Discount

Rebate

Meaning

The Discount is that amount which is granted by the seller of the goods and services to its buyer. The Rebate is that amount which is granted by the seller of the goods and services to its buyer at the time of defect detected in the goods

Types

It has two types:
1. Trade Discount
2. Cash Discount

It has no type. 

Purposes 

It has two purposes i.e. for promoting the sale of goods and for receiving earlier payments. It is granted for giving relief to the buyer

Timing

It is granted at the time of deal and payment  It is granted at the time of defect detected in the goods

Treatment on the Invoice 

The trade Discount has deducted from the total value of goods while preparing Invoice and cash discount has not deducted. 

it has no treatment while preparing an invoice. 

Treatment in the Financial Books.

The trade Discount has not shown in the Financial books and cash discount has shown in the Financial Books.

It has shown in the financial books in the sperate account. 

Download the chart:

If you want to download the chart please download the following image and PDF file

Chart of Difference between Discount and Rebate 300x278 - Difference Between Discount and Rebate
Chart of Difference between Discount and Rebate
application pdf - Difference Between Discount and Rebate
Chart of Difference between Discount and Rebate

 

The conclusion of the Difference: –

The Discount and Rebate are very different from each other as per we are discussed above. 

Thanks for reading the topic of Difference between Discount and Rebate. 

please comment your feedback whatever you want. If you have any question please ask us by commenting. 

Check out T.S. Grewal +1 Book 2019 @ Official Website of Sultan Chand Publication

T.S. Grewals Double Entry Book Keeping - Difference Between Discount and Rebate

T.S. Grewal’s Double Entry Book Keeping

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