of payment (c) Time. Trade discount is allowed at the time of purchasing of goods, while cash discount is allowed at the time of making payment. (d) Disclosure. Trade discount is shown as reduction in the invoice itself, while cash discount is not shown in the invoice, Moreover, trade discount account is not opened in the ledger, while cash discount account is opened in the ledger. (e) Variation. Trade discount may vary with the quantity of goods purchased, while cash discount may vary with time period within which payment is received. Accounting (Closing) Entries for preparing Profit and Loss Account Following journal entries will be passed in the Journal Proper for preparing the Profit and Loss Account: (0) For transfer of items of expenses, losses, etc., appearing on the debit side of the Trial Balance j44 Dr Profit and Loss Account To Salaries To Rent To Commission To Advertisements To Bad Debts To Discount To Printing and Stationery (ii) For transfer of items of incomes, gains, etc., appearing on the credit side of the Trial Balance Interest Account Dr. Dividends Account Dr Discount Account Dr. To Profit and Loss Account (iii) For transfer of net profit or net loss: In case the total I of the credit side of the Profit and Loss Account is greater than the debit side of the Profit and Loss Account the difference is termed as Net Profit. In a reverse case, it will be termed as Net Loss. The amount of Net Profit or Net Loss shown by the Profit and Loss Account will be transferred to Capital Account in case of sole proprietary firm. In case of a partnership firm, the amount of net profit or net loss will be transferred to the Partners' Capital Accounts in the agreed ratio. In the absence of any agreement, the partners will share profits and losses equally. For transfer of Profit Profit and Loss Account Dr. To Capital Account(s) For transfer of Net Loss Capital Account(s) Dr. To Profit and Loss Account Illustration 6.7. From the following balances, taken from the Trial Balance of Shri Suresh, prepare a Trading and Profit and Loss Account for the year ending 31st Dec., 1999: iculars Rs Stock on 1.1.1998 2.000 Purchases and Sales 20.000 30,000 Returns 1.000 Carriage 1.000 Cartage Rent Interest received 2.000 Salaries 2.000 General Expenses 1.000 Discount 500 Insurance 500 Rs 2.000 1.000 1.000 The Closing Stock on 31st December, 1998 is Rs 5,000