Skip to content

CSEET · Business Communication · Common Business Terminologies

Meera Traders gives a customer a reduction of 5% on the list price of goods because the customer buys in large quantity. This reduction is best called a:

The reduction is a trade discount. It is allowed off the list price because of the quantity purchased and is shown on the invoice. It differs from a cash discount, which rewards prompt payment of the amount due.

  1. ATrade discountCorrect
  2. BCash discount
  3. CRebate for late payment
  4. DBad debt allowance

Explanation

A trade discount is a reduction from list price, usually for bulk purchase or trade status, and is deducted on the invoice itself. A cash discount is allowed for prompt payment, which is not mentioned here. Late payment would attract interest, not a reduction, and a bad debt allowance concerns unrecoverable dues.

Did you get it right without looking?

One question tells you little. A timed set on Common Business Terminologies shows your real accuracy, how long you take and where you lose marks.

Practise Common Business TerminologiesFree diagnostic mock

More Common Business Terminologies questions