The concession received on the price of defective goods is called:
Correct answer: C. Allowance
- A. Discount
- B. Cash discount
- C. Allowance
- D. Trading discount
Explanation
An allowance is a reduction granted because goods are defective, damaged, or otherwise unsatisfactory while the buyer keeps them. A cash discount instead rewards prompt payment, and a trading discount is a general price reduction from the list price.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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