Question

4. Discount allowed by the seller of goods to encourage early payment is known as ...​

Answer 1

Answer:

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Explanation:

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Answer 2

ANSWER :

Discount allowed by the seller of goods to encourage early payment is known as Cash Discount.

• Cash discount is an allowance granted by a creditor to debtors for encouraging the debtors to pay the amount due within a specified period.

MORE INFORMATION :

• Cash discount is an additional allowance which is not related to trade discount.

• Cash discount is granted to all, both the trader and non-trader debtors.

• Cash discount is simply an inducement to a debtor for making prompt payment of debts.

• Cash discount is recorded separately in the Cash book as it is related to the receipt and payment of cash.

• By providing cash discount, the creditor can get cash within the stipulated period and thereby he can generate extra cash resource.

• The debtor can get cash discount by oaying witihin the stipulated period and thereby he can increase his income.

• Cash discount is calculated on the net invoice price, i.e., after deduction of trade discount.

• Amount of cash sales in the business can be increased by allowing cash discount.