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WAEC Financial Accounting 2012 Question 2

Question 2

Cash Book

Trade discounts are given for

  1. A.bulk purchases.
  2. B.prompt payment.
  3. C.quick delivery.
  4. D.cash payment.
Show the answer and explanation

Answer: A (bulk purchases.)

Explanation

A trade discount is a reduction off the list price, usually for buying in large quantities or to traders. Prompt payment earns a cash discount instead.