Certified Internal Auditor (CIA) Part 3: Business Knowledge for Internal Auditing — Question 78

Which of the following price adjustment strategies encourages prompt payment?

Answer options

• A. Cash discounts.
• B. Quantity discounts.
• C. Functional discounts.
• D. Seasonal discounts.

Correct answer: A

Explanation

Cash discounts are specifically designed to incentivize customers to pay their invoices quickly, often by offering a percentage off the total if paid within a certain timeframe. The other options, such as quantity, functional, and seasonal discounts, do not primarily focus on encouraging prompt payment, but rather on bulk purchases, specific functions, or timing of purchases.