Question 3
Cash BookWhich of the following is the reason why a seller allows a customer cash discount?
- A.Agreement to become a regular customer
- B.Introducing a new customer to the seller
- C.Settlement of account within a stated period
- D.Placing a large order
Show the answer and explanation
Answer: C (Settlement of account within a stated period)
Explanation
Cash discount rewards a customer for paying within the agreed time; a reduction for large orders is trade discount.