Trade discount
A trade discount reduces the listed price at the time of sale, commonly for volume or commercial terms. If the list price is 1,000 and a 10% trade discount applies, the net price is 900 before sales tax. Record the transaction at that net amount. The discount is already reflected in the invoice price and is not normally posted as a separate expense.
Worked example
A 10% trade discount on 1,000 leaves a recorded price of 900 before tax.
Common mistake
Record the net amount; a conditional early-payment discount is a settlement discount.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | F2 | Supporting | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: Trade discounts