ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What is the amount deducted from the selling price for pay-ment within a specified time period, such as 10 days?
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Cash discount
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Sells discount
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Quality discount
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Trade discount
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Explanation:
Detailed explanation-1: -An early payment discount is one form of trade finance in which a buyer pays less than the full invoice amount due by paying the supplier earlier than the invoice maturity date. An early payment discount is also commonly referred to as a cash discount or prompt payment discount.
Detailed explanation-2: -The cash discount can be calculated using the formula: Cash Discount = Purchase Price x Discount Rate. The original purchase price of the product is multiplied by the discount rate that is offered to obtain the cash discount amount.
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