Question

A trade discount is:


(A) A term used by a purchaser to describe a cash discount given to customers for prompt payment.

(B) A reduction in selling price below the list price.

(C) A term used by a seller to describe a cash discount granted to customers for prompt payment.

(D) A reduction in price for prompt payment.

(E) Also called a rebate.

Answer 1

Answer:

(B) A reduction in selling price below the list price.

Explanation:

A trade discount is a reduction in selling price below the list price. A trade discount is usually given to wholesalers or retailers. It is usually given to people who buy on bulk.

Cash discount is given when a buyer makes prompt payment.

A rebate is a form of sales promotion where customers are given a cash refund for purchases made when certain conditions are met.