What is a cash discount on sales taken by a customer commonly called?

A cash discount on sales taken by a customer is commonly referred to as a sales discount. This term specifically identifies the reduction in the sale price offered to encourage customers to pay their bills promptly. When buyers are given this type of discount, it often comes with specific terms, such as "2/10, net 30," meaning a 2% discount is available if the invoice is paid within 10 days, with the full amount due in 30 days if the discount is not taken.

The reason this answer is correct lies in the terminology used in accounting and sales practices. A sales discount serves as an incentive for timely payment from customers, enhancing cash flow for the seller.

Other terms, such as purchase discount, prompt payment discount, and vendor discount, do not accurately reflect the definition of a cash discount given from a seller to a customer. A purchase discount generally refers to a reduction in the price a buyer pays, while a prompt payment discount specifically highlights the timeliness of the payment but is typically used in a broader context, not limited to sales transactions. A vendor discount refers to discount terms provided by suppliers or vendors to their customers. Thus, the most precise and commonly used term for a cash discount received by a customer for quick payment