Difference Between Purchases Discount And Sales Discount

Purchases Discount is a Contra Expense Account which is given to buyers by suppliers of goods while a sales discount is the opposite of Sales Discount which is a Contra Revenue Account which is given by sellers to buyers when they sold goods or services to them.

A Purchases Discount is given by the supplier or vendor to the company on the purchase of goods while a Sales Discount is given by the company to its customers to induce them to purchase at a discounted price. Form the point view of the business of the company, it is a Sales discount and from the point view of buyer’s business it is a purchases discount.

Purchases discount is deducted from Total Purchases in order to calculate net purchases while sales discount is deducted from Gross or Total Sales in order to calculate net sales for the period in Income Statement.

Purchases Discount is a Contra Expense Account which is deducted from Total Purchases or Gross Purchases on Income Statement while Sales Discount is a Contra Revenue Account which is deducted from Total Sales or Gross Sales on Income Statement.

So, the main or primary difference between purchases discount and sales discount is that purchases discount is given by the supplier / vendor or seller to the company / customer while sales discount is given by the company to its customers to increase Sales.