A discount that is allowed to encourage a debtor to pay off his debt within a period is the?

A. annual discount
B. trade discount
C. periodic discount
D. cash discount

Correct Answer:

Option D – cash discount

Explanation

A cash discount is a deduction allowed by some sellers of goods or by some providers of services in order to motivate customers to pay within a specified time. The cash discount is also referred to as an early payment discount.