Paisley Lane Soaps recently contracted with a chain of grocery stores to provide organic bar soap to the chain.These volume orders are the company's first commercial venture as they have primarily sold directly to consumers.Typically,Paisley Lane Soaps charges $6 per bar of soap but has contracted with the grocery store chain for $3.50 per bar.In addition,Paisley Lane Soaps has negotiated a 2% discount on the order if the grocery store chain pays in full within 10 days of product delivery.This practice is called:
A)cash discounts
B)promotional allowances
C)noncumulative quantity discounts
D)trade discounts

Question

Paisley Lane Soaps recently contracted with a chain of grocery stores to provide organic bar soap to the chain.These volume orders are the company's first commercial venture as they have primarily sold directly to consumers.Typically,Paisley Lane Soaps charges $6 per bar of soap but has contracted with the grocery store chain for $3.50 per bar.In addition,Paisley Lane Soaps has negotiated a 2% discount on the order if the grocery store chain pays in full within 10 days of product delivery.This practice is called: ​
A)​cash discounts
B)​promotional allowances
C)​noncumulative quantity discounts
D)​trade discounts

Quizplus · Accepted Answer

The practice described in the scenario is a cash discount. It is a discount given to customers who pay their invoice within a specific time frame, and it is often used to encourage prompt payment and improve cash flow. The other options, such as promotional allowances, noncumulative quantity discounts, and trade discounts, do not fit the scenario.

Paisley Lane Soaps Recently Contracted with a Chain of Grocery