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Business Studies

Types of Sales Promotion

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Question

In order to enable retailer earn profit and still sell goods at the list price, the manufacturers frequently grant them substantial reduction from the list price. Such a reduction in price is called ____________.

A

Trade Discount

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B

Cash Discount

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C

Price Reduction

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D

Subsidies

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Solution

The correct option is B Trade Discount
Trade discount is allowed to the customer to promote the sales. Trade discount is allowed on the list price. It reduces the price for the customer.
Trade discount is not recorded in the books of account. Only net value is recorded in books of account.

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