Concept:A cash discount is a price reduction offered to a customer to motivate early or prompt payment of an invoice.
Explanation:Sellers use discounts to encourage buyers to pay quickly and improve their own cash flow.
A cash discount is usually stated in terms such as
2/7; net
30.
This means that if the buyer pays within
7 days, they may deduct
2% from the invoice amount.
If payment is not made within that early period, the full invoice amount must be paid within
30 days.
Therefore, the incentive given for prompt payment is a cash discount, not a seasonal, quantity, or trade discount.
Answer:A. cash discount