Question

Identify the statements below which summarize what cash discounts are?

1) Discounts offered to customers for paying in cash instead of credit.
2) Discounts offered to customers for purchasing a certain quantity of goods.
3) Discounts offered to customers for returning a product within a specified time period.
4) Discounts offered to customers for referring new customers to the business.
5) Discounts offered to customers for purchasing a specific product or service.

Answer 1

Cash discounts are incentives for customers that encourage payment in cash rather than credit, purchasing in quantity, or buying specific products. They are distinct from other sales promotions like money-back guarantees or referral incentives.

Step-by-step explanation:

Cash discounts are incentives provided to customers to encourage prompt payment. Specifically, these discounts are:

1. Discounts offered to customers for paying in cash instead of using credit.
2. Discounts offered to customers for purchasing a certain quantity of goods.
3. Discounts offered to customers for purchasing a specific product or service.

These discounts serve as an effective tool for businesses to manage their cash flow and stimulate sales. It's important to understand that cash discounts differ from other promotions, such as money-back guarantees, which are assurances to refund if not satisfied with a product, or referral incentives, which reward customers for bringing in new clientele.