Question

Redline Editorial Services sent a $1,000 invoice to a customer for copyediting a booklet. According to the terms of the invoice, the customer would receive a 3 percent discount on the invoice price if the invoice was paid within 15 days. This is an example of a:
a. Quantity discount.
b. Cash discount.
c. Rebate.
d. Functional discount.
e. Promotional allowance.

Answer 1

Answer:

b. Cash discount.

Explanation:

The cash discount is the discount given by the company to its customers in order to pay the amount within the prescribed limit

Let us take an example 3/15 net 30

This means 3% discount is given if payment is made within 15 days and the total credit period allowed is 30 days

So as per given situation, the term of the invoice stated the same scenario as explains above

Therefore, it is a case of cash discount