When General Motors provides payments or price reductions to its new car dealers as rewards for participating in advertising and sales support programs,it is granting a ________.
A) trade discount
B) functional discount
C) cash discount
D) promotional allowance
E) trade credit

Question

Quizplus · Accepted Answer

A promotional allowance is a type of payment or price reduction granted to dealers as a reward for participating in advertising and sales support programs. This is different from a trade discount, which is a reduction in the list price offered to buyers who meet certain criteria (such as purchasing in large volumes), a functional discount, which is a price reduction given to a buyer who agrees to perform certain functions (such as storing and distributing the products), and a cash discount, which is a reduction in the invoice price offered to buyers who pay their bill before a certain date. Trade credit is a form of financing provided to buyers who do not pay for their purchases immediately, but instead receive goods or services and pay for them at a later date.

When General Motors Provides Payments or Price Reductions to Its