What are the different types of price discounts and allowances?
What will be an ideal response?
The different types of price discounts and allowances are:
• Discount - This is a price reduction given to buyers who pay their bills promptly.
• Quantity discount - This is a price reduction offered to those who buy in large volumes.
• Functional discount - This is offered by a manufacturer to trade-channel members if they perform certain functions like selling, storing, and record keeping.
• Seasonal discount - This is a price reduction given to those who buy merchandise or services out of season.
• Allowance - This is an extra payment designed to gain reseller participation in special programs. These are of two types:
i. Trade-in allowances - These are granted for turning in an old item when buying a new one.
ii. Promotional allowances - These reward dealers for participating in advertising and sales support programs.
You might also like to view...
All of the following appear in the numerator for the times interest earned ratio calculation, except:
A. Notes payable B. Net income C. Interest expense D. Tax expense
Sudley Shoppe had severe damage done to its Christmas inventory due to an escaped circus elephant rampaging through the store. The inventory loss was $80,000 before applicable taxes of $20,000. How should Sudley Shoppe report the loss?
A. $80,000 loss in other expenses and losses B. $80,000 extraordinary loss C. $60,000 extraordinary loss D. $100,000 extraordinary loss