What are the points, which should be kept in mind while maintaining purchases Book?

Purchases book should be maintained remembering the following - Cash purchases are not entered in this book since these will be entered in the cash book - Credit purchases other than good or material dealt in such as office furniture computers are journalized. They also are not entered in the purchases book. Only credit purchases of goods traded in or material used for production in a factory should be recorded in purchases book ## Q.3 Show the difference between trade discount and cash discount (4 Marks) Ans. | Trade discount | Cash Discount | | --- | --- | | It is allowed on a certain quality being purchased Trade discount is not recorded in the ledger Accounts iii) The amount of the trade discount is deducted from the invoice | It is allowed on payment being made before a certain date A ledger account has to be maintained for cash discount in the ledger It is not deducted from the invoice |