Asked by Itzamar Gutierrez on Jun 14, 2024
Verified
A cash discount allows:
A) the seller to secure prompt payment,but has no benefits for the buyer.
B) the buyer to pay a lower price per unit,but has no benefits for the seller.
C) the seller to secure prompt payment and the buyer to pay a lower price per unit.
D) the seller to demand payment in cash on demand (C.O.D. ) upon receipt of goods.
E) the buyer to always calculate the discount based on the delivery date.
Cash Discount
A reduction in the invoice price offered by sellers to buyers as an incentive for early payment before the established due date.
Prompt Payment
The practice of paying invoices on time, which can help build good relationships with suppliers and might qualify the payer for discounts.
Lower Price
The reduction of cost or charge for a product or service, making it more affordable.
- Understand the concept and calculations involved in cash discounts and their mutual benefits for buyers and sellers.
Verified Answer
SS
Shaquanda SmithJun 19, 2024
Final Answer :
C
Explanation :
A cash discount allows the seller to secure prompt payment and the buyer to pay a lower price per unit. Option A is incorrect as it states that only the seller benefits, while option B is incorrect as it states that only the buyer benefits. Option D is incorrect as it refers to a different payment term, C.O.D. Option E is incorrect as it is not a valid explanation of cash discount.
Learning Objectives
- Understand the concept and calculations involved in cash discounts and their mutual benefits for buyers and sellers.