Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 1 - No. 46)
What is the main purpose of trade discounts?
To reduce final sale prices and encourage customer loyalty and repeat sales.
To increase the profit margin on each sale.
To eliminate competition from other businesses.
To hide the true cost of goods sold.
Explanation
Trade discounts reduce final sale prices, but also encourage customer loyalty and repeat sales.
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