Which statement defines a cash discount?

• A. A reduction of the price given for payment of an account within the time limits established by the sales contract.
• B. A fee charged for express services.
• C. A tax assessed on the sale of funeral merchandise.
• D. A discount given for paying with a bank card.

Answer: (A)

Cash discount is an incentive offered by the seller to encourage early payment by reducing the amount due if payment is made within a specified period in the sales terms (for example, 2/10, net 30). It is not a fee for express services, not a tax, and not a discount for paying with a bank card. So the definition that describes a reduction of the price for payment within the time limits established by the sales contract is the correct one.