Which two types of discounts do businesses typically offer to customers?

The correct choice highlights two prevalent types of discounts, trade discounts and settlement discounts, which are commonly utilized by businesses to attract and retain customers.

Trade discounts are reductions offered to customers, typically based on the volume of goods purchased or the nature of the business relationship. These discounts serve as an incentive for bulk purchases or to reward loyal customers and are often applied before calculating taxes on the sale.

Settlement discounts, often known as cash discounts, are provided to encourage prompt payment. Businesses may offer these discounts as a percentage off the total invoice if the customer pays within a specified time frame. This strategy not only improves cash flow for the business but also motivates customers to settle their accounts more quickly.

The other options, while they represent different types of discounts, do not capture the significance and common practice of trade and settlement discounts in the context of customer offerings. Seasonal discounts refer to reductions tied to certain times of the year and may not be as universally applicable. Volume discounts do exist, but writing off discounts is less common as it pertains to adjusting or eliminating amounts owed rather than an intentional strategy to influence purchasing behavior. Additionally, referral discounts are incentives for bringing in new customers, which, while beneficial, are not among the foundational discounts businesses regularly implement.