Rick's Bike Shop allows customers to use a credit card for purchases.The shop pays 3 percent of the sale to the credit card company.To promote more business,Rick decides to offer a lower price to customers paying cash-that price being 3 percent less than the standard list price.Rick is giving his customers a(n):
A)functional discount.
B)trade-in allowance.
C)promotional allowance.
D)discount-for-cash.

Question

Quizplus · Accepted Answer

Rick is offering a discount for customers who pay cash, which is commonly referred to as a discount-for-cash. This is not a functional discount because it is not based on quantity or volume, nor is it a trade-in allowance because customers are not trading in any merchandise. It also cannot be a promotional allowance because the price reduction is only offered to customers who pay with cash, rather than being a promotion for all customers.

Rick's Bike Shop Allows Customers to Use a Credit Card