When a customer purchases merchandise inventory from a business organization, she may be given a discount which is designed to induce prompt payment. Such a discount is called a(n)

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The discount given to a customer for prompt payment of merchandise inventory is called a cash discount. This discount is designed to incentivize customers to pay quickly and therefore improve the company's cash flow. Choice A, trade discount, refers to a discount given to resellers in the supply chain. Choice B, nominal discount, is not a commonly used term in accounting or finance. Choice C, enhancement discount, is not a standard accounting term.

When a Customer Purchases Merchandise Inventory from a Business Organization