Cash Discount
It is the discount given for prompt or early payment
Suppose a shopkeeper sells an item 100 kg @ 20 per kg
He places a condition that if amount is paid within 5 days,he will get 5% discount
In this case
Sales price=100*20=2000
Less
Cash discount @ 5%=100
Net Amt=1900
Trade Discount
It is a discount which is decided between buyer and seller
Suppose a shopkeeper sells an item @ 20 RS/Kg
He places a condition that if minimum 100 kg are purchased,then he will give discount of 2/kg.Goods will cost 18/kg
in this case,trade discount is 100*2=Rs 200
Preliminary Expenses
these are expenses which are incurred prior to company formation
Example Legal fees to start a company
As per Income tax,they are allowed in 5 years (1/5 every year)
Written on Oct. 12, 2016, 9:31 p.m.