A dairy farm sells milk to a confectionery company.The dairy offers the company a reduction of 10 percent on the total amount of the invoice if the company settles the amount within a period of 7 days instead of the usual 30 days.This is an example of a(n):
A)seasonal discount.
B)listing allowance.
C)cumulative quantity discount.
D)rebate.
E)cash discount.

Question

Quizplus · Accepted Answer

This is an example of a cash discount, which is a reduction in price offered to customers who pay their bills within a specified time period. In this case, the dairy is offering a 10% reduction if the company pays within 7 days instead of the usual 30 days.

A Dairy Farm Sells Milk to a Confectionery Company