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JAMB Principles of Accounts 2001 Question 16

Question 16

Cash Book

A reduction in the catalogue price of an article given by a wholesaler to a retailer is called a

  1. A.bad debt
  2. B.trade discount
  3. C.premium
  4. D.cash discount.
Show the answer and explanation

Answer: B (trade discount)

Explanation

Trade discount is a reduction from the catalogue (list) price given to traders.