Trade discount are
a. not recorded in the accounts, rather they are means of computing a price
b. used to avoid frequent changes in catalogues
c. used to quote different prices for different quantities purchased.
d. all of the above

I chose D, however, B I don't understand as trade discount.

Thanks.
beadwoman

Are you saying you don't understand why B would count?

Um... I've never actually thought of that before. But A and C are definitely correct, so it has to be D. The companies I've dealt with have done trade discounts mostly as a way to give different pricing to different companies. For instance, 5% off if you buy xxx - xxx per year, 10% if you buy xxx - xxx per year. I've pretty much worked on the side of the company getting the discount, not giving it, so I haven't actually seen that side first hand. If any of those companies was doing it as a way of avoiding changing catelogs, I was not aware of it.

However... I can see the point. Sort of. Rather than just change prices, they could just change the discount and avoid printing new prices. I see it as a bit impractible because they might not know future prices, or the price of some items may increase more than others. (Not to mention customers wondering why their discounts are changing.) But I see what they're getting at -- change the discount instead of the list price, because the customer's discount is not generally in the catelog. A better point is not having to have a separate catelog for different customers. :-)