WAEC Financial Accounting 2006 Question 42

Question 42

Cash Book

The amount allowed off the cost price of an article to stimulate patronage is

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

Answer: B (trade discount)

Explanation

Trade discount is a reduction in list price to encourage buying.