FIN 352 Lecture Notes - Lecture 2: Prime Rate, Purchase Order, List Price
Document Summary
Retailers should understand the different types of discounts offered, dating and shipping terms. Terms of sale: (cid:498)conditions of the sale that are agreed upon when the merchandise is purchased(cid:499). Terms deal with discounts granted, dating for payments, transportation arrangements and shipping charges. A deduction (expressed as a %) off the quoted or billed cost. 3 basic types of discounts: trade, quantity, cash. Trade: a percentage or a series of percentages deducted from list price (retail price recommended by the manufacturer) The number and, or amount of trade discounts varies according to the purchasers and the amount of marketing services performed by that group. Deducted regardless of when the invoice is paid. Billed cost = list price trade discount(s) A percentage off the billed cost given by a vendor when a stipulated quantity is purchased. Deductible regardless of when invoices are paid. Offered as an incentive for buyers to commit to purchasing large amounts of goods.
