The basic purpose of offering customers cash discounts such as 2/10,n/30 is to:
A)Increase sales.
B)Reduce net sales.
C)Speed up the collection of accounts receivable.
D)Focus management's attention upon customers that fail to take advantage of all available cash discounts.

Question

Quizplus · Accepted Answer

The main purpose of offering cash discounts to customers is to encourage them to pay their bills early, thus speeding up the collection of accounts receivable. By offering a discount for early payment, companies can reduce the amount of time it takes to collect payments and improve their cash flow. This can be particularly important for small businesses that may struggle with cash flow issues. While cash discounts may also help to increase sales, reduce net sales, or focus attention on customers who don't take advantage of discounts, these are secondary benefits rather than the primary purpose of offering discounts.

The Basic Purpose of Offering Customers Cash Discounts Such as 2/10,n/30