Differentiate between the… | Commerce

Question 1 Report

Differentiate between the following paired terms:
(a) Trade discount and cash discount
(b) Branding and packaging
(c) Indemnity and compensation
(d) cash receipt and invoice
(e) Credit sales and hire purchase.

Answer

Differences between the paired terms

Term	Distinction
(a) Trade discount	A reduction in the catalogue (list) price given by a manufacturer or wholesaler to a retailer to allow the retailer a profit margin. It is deducted on the invoice and is not affected by the time of payment.
Cash discount	A reduction granted to a debtor as an incentive to pay within a stated period (prompt payment). It depends on when payment is made and appears in the cash book, not usually on the invoice face.
(b) Branding	Giving a product a distinctive name, symbol, term or design (a brand) to identify it and distinguish it from competitors' products, e.g. Peak, Omo.
Packaging	The process of designing and producing the wrapper or container in which a product is protected, preserved, carried and presented for sale.
(c) Indemnity	The principle of insurance which restores the insured to the exact financial position he was in before the loss occurred, so that he neither gains nor loses. He cannot recover more than the actual loss.
Compensation	The actual payment of money (or replacement/repair) made to the insured by the insurer to make good the loss suffered. It is the means by which indemnity is carried out.
(d) Cash receipt	A document issued by a seller to a buyer as evidence (acknowledgement) that payment has actually been made for goods or services.
Invoice	A document sent by the seller to the buyer showing details, quantities and prices of goods supplied on credit and the total amount due for payment. It is a demand for payment, not proof of payment.
(e) Credit sales	A sale in which goods are handed over and ownership passes to the buyer at once, but payment is made later (or in instalments); the goods legally belong to the buyer immediately.
Hire purchase	An agreement in which the buyer takes possession of goods and pays by instalments, but ownership remains with the seller until the last instalment is paid; the buyer only hires the goods until then.

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Answer Details

Differences between the paired terms

Term	Distinction
(a) Trade discount	A reduction in the catalogue (list) price given by a manufacturer or wholesaler to a retailer to allow the retailer a profit margin. It is deducted on the invoice and is not affected by the time of payment.
Cash discount	A reduction granted to a debtor as an incentive to pay within a stated period (prompt payment). It depends on when payment is made and appears in the cash book, not usually on the invoice face.
(b) Branding	Giving a product a distinctive name, symbol, term or design (a brand) to identify it and distinguish it from competitors' products, e.g. Peak, Omo.
Packaging	The process of designing and producing the wrapper or container in which a product is protected, preserved, carried and presented for sale.
(c) Indemnity	The principle of insurance which restores the insured to the exact financial position he was in before the loss occurred, so that he neither gains nor loses. He cannot recover more than the actual loss.
Compensation	The actual payment of money (or replacement/repair) made to the insured by the insurer to make good the loss suffered. It is the means by which indemnity is carried out.
(d) Cash receipt	A document issued by a seller to a buyer as evidence (acknowledgement) that payment has actually been made for goods or services.
Invoice	A document sent by the seller to the buyer showing details, quantities and prices of goods supplied on credit and the total amount due for payment. It is a demand for payment, not proof of payment.
(e) Credit sales	A sale in which goods are handed over and ownership passes to the buyer at once, but payment is made later (or in instalments); the goods legally belong to the buyer immediately.
Hire purchase	An agreement in which the buyer takes possession of goods and pays by instalments, but ownership remains with the seller until the last instalment is paid; the buyer only hires the goods until then.

Read lesson note on Advertising (WAEC)

Read lesson note on Legal Aspect Of Business (WAEC)

Read lesson note on Commerce (JAMB)

Advertising

Legal Aspect Of Business

Commerce

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Differentiate between the following paired terms: (a) Trade discount and cash discount (b) Branding and packaging (c) Indemnity and compensation (d) cash re...

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Differentiate between the following paired terms: (a) Trade discount and cash discount (b) Branding and packaging (c) Indemnity and compensation (d) cash re...

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