Noncumulative Quantity Discounts

question 142

Multiple Choice

Noncumulative quantity discounts

• A) apply only to individual orders.
• B) are designed to primarily encourage repeat buying.
• C) reduce the customer's cost for additional purchases.
• D) tie a buyer to the seller after a single purchase.
• E) are never attractive to buyers.

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Definitions:

LIBOR

The London Interbank Offered Rate, an interest rate average calculated from estimates submitted by leading banks in London and used as a global benchmark for short-term interest rates.

Interest Expense

The expenses an organization faces for using borrowed capital over a specified duration.

Effective Interest Rate

The actual rate of interest earned or paid on an investment or loan over a given period, accounting for the effect of compounding.

Bond Discount Amortized

The process of gradually writing off the discount on bonds payable over the life of the bonds, affecting interest expense on the income statement.