Discounts and Allowances Flashcards

Questions and Answers

What is a Quantity Discount?

Offered to customers who buy during times of the year when sales are normally low

Reduction in price in exchange for an old product

Offered to customers who buy large quantities of a product (correct)

Offered for cash payments only

What defines a Seasonal Discount?

Price reduction in exchange for an old product

Specific percentage reduction for businesses

Offered to customers buying during low sales periods (correct)

Offered to customers for cash payments

What is a Cash Discount?

Discount for paying cash or prompt credit payment (correct)

Reduction based on coupon use

Price reduction in advertising

Discount offered to businesses in distribution

What is a Trade Discount?

Percentage reduction for businesses in a distribution channel Signup and view all the answers

What is a Trade-in Allowance?

Reduction in price for exchanging an old product Signup and view all the answers

What is an Advertising Allowance?

Price reduction for participating in advertising Signup and view all the answers

What is a Coupon?

Certificate for a specific price reduction Signup and view all the answers

What is a Rebate?

Specific amount of money returned after a purchase Signup and view all the answers

Study Notes

Discounts and Allowances

Quantity Discount: Incentive for customers to purchase large volumes of a product, typically reducing the unit price based on the amount bought.
Seasonal Discount: Encourages sales during off-peak times of the year; businesses offer discounts to boost sales when demand is typically low.
Cash Discount: Reward for customers who pay immediately or opt for cash payment instead of credit, promoting faster payments and reducing credit risk for sellers.
Trade Discount: A certain percentage off the invoice price, given to businesses at different distribution levels, aiding in price competitiveness among distributors.
Trade-In Allowance: Price reduction offered when exchanging an old product for a new one, incentivizing consumers to upgrade and facilitating sales for new merchandise.
Advertising Allowance: Financial support provided to retailers or distributors who actively market a product, which can either be a direct price cut or a specific monetary contribution towards advertising efforts.
Coupon: Promotional tool providing a direct price reduction, distributed in printed form, aimed at encouraging purchases and increasing customer engagement.
Rebate: Post-purchase refund offered to customers, usually a portion of the purchase price, which serves to incentivize sales and attract new customers to the brand.

Description

Test your knowledge of various types of discounts and allowances with these flashcards. Each card provides a definition that will help you understand how businesses offer price reductions based on different criteria. Perfect for students in finance or marketing courses!