Theory question 105
Purchase and Sale of GoodsFelisco Ltd., a raincoat manufacturing company intends to gain patronage from its customers by offering a discount once a year when demand is low.
(a) Name the type of discount the company could offer.
(b) State four reasons the company would offer such a discount.
(c) State five functions of a customs authority.
Show the model answer
(a) Seasonal discount.
(b) Any four: to increase sales in the off-season (dry season); to clear old stock and free storage space; to attract new customers; to keep regular customers loyal; to get cash flow when demand is low; to compete with rival firms; to reduce storage costs and risk of damage.
(c) Any five: collects import, export and excise duties; prevents smuggling; stops the import of banned/harmful goods; controls bonded warehouses; examines and values imported goods; collects statistics on imports and exports; enforces import and export regulations; issues licences and permits.
A discount given at a particular time of year is a seasonal discount.