A vendor's price reduction is a discount when it is applied to net price.

Master the ManageFirst Purchasing Exam. Prepare with engaging online quizzes and flashcards designed to enhance your understanding of purchasing concepts. Each question is accompanied by hints and detailed explanations to boost your confidence and readiness for the test.

Multiple Choice

A vendor's price reduction is a discount when it is applied to net price.

Explanation:
A discount is a reduction in the amount owed for goods. When a vendor’s price reduction is applied to the net price, it lowers the actual price you pay for the merchandise after any other adjustments but before taxes and freight, which is exactly what a discount does. If the same reduction were applied to shipping, it would only reduce the freight charge, not the price of the goods themselves. If it were applied to tax, it would reduce the tax amount, not the goods' price. If it were applied to the list price, it would change the quoted starting price rather than reduce the net amount due on the goods. So applying the price reduction to net price best represents a discount.

A discount is a reduction in the amount owed for goods. When a vendor’s price reduction is applied to the net price, it lowers the actual price you pay for the merchandise after any other adjustments but before taxes and freight, which is exactly what a discount does. If the same reduction were applied to shipping, it would only reduce the freight charge, not the price of the goods themselves. If it were applied to tax, it would reduce the tax amount, not the goods' price. If it were applied to the list price, it would change the quoted starting price rather than reduce the net amount due on the goods. So applying the price reduction to net price best represents a discount.

More Multiple Choice Questions
Subscribe

Get the latest from Passetra

You can unsubscribe at any time. Read our privacy policy