Which of the following is TRUE of cash discount?
A)It increases bad debts because after availing discounts all customers may not pay.
B)It decreases the investment in accounts receivable and increases the per unit profit.
C)It helps to speed up collections without putting pressure on customers.
D)It reduces sales because the customers feel that the products are of inferior quality.

Question

Quizplus · Accepted Answer

Cash discounts are offered to encourage early payment, which helps speed up collections without pressuring customers.

Which of the Following Is TRUE of Cash Discount