### What does the term "Credit Card Discounts" refer to? - [x] The fees that credit card companies charge the retailer for billing and handling - [ ] Discounts given on credit card purchases by merchants - [ ] Promotional rewards offered by credit card companies to cardholders - [ ] Cash back offers for using a particular credit card > **Explanation:** Credit card discounts refer to the fees that credit card companies charge the retailer for billing and handling, typically between 1 and 3 percent. This amount is deducted from the payment the credit card company sends to the retailer. ### Where should credit card discount fees be reported in a business's financial statements? - [ ] Under capital expenditures - [ ] As a long-term liability - [ ] As accounts receivable - [x] As a direct expense on the profit and loss statement > **Explanation:** Credit card discount fees are direct expenses and should be reported on the profit and loss statement. These fees represent a cost associated with the use of credit card services for processing customer payments. ### If a motel customer charges $200 for a night’s stay and the credit card company’s fee is 2%, how much will the motel ultimately receive? - [ ] $180 - [x] $196 - [ ] $190 - [ ] $198 > **Explanation:** With a 2 percent fee on a $200 charge, the credit card company will deduct 2% of $200, which is $4. Therefore, the motel will receive $200 - $4 = $196. ### Why might credit card companies offer lower discount rates to certain businesses such as motels and hotels? - [ ] To ensure the business has enough cash flow - [ ] To provide better rewards for cardholders - [x] To compete with other credit card companies for merchant clients - [ ] To subsidize higher fees for other types of businesses > **Explanation:** Credit card companies compete with each other by offering lower discount rates to attract more merchant clients, including businesses like motels and hotels, to incentivize them to accept their cards. ### How does the credit card discount fee impact a retailer's revenue? - [ ] It increases revenue directly - [ ] It has no impact on revenue - [x] It reduces the amount of money the retailer receives upon settling charges - [ ] It allows the retailer to charge higher prices > **Explanation:** The credit card discount fee reduces the amount of money the retailer receives from transactions because the fee is deducted by the credit card company from the total payment made by customers. ### What percentage range do credit card discount fees typically fall within? - [ ] 0.5% to 1.0% - [ ] 3% to 5% - [ ] 1% to 4% - [x] 1% to 3% - [ ] 2% to 3.5% > **Explanation:** Credit card discount fees generally run between 1 and 3 percent. This range is typical for the fees that credit card companies charge retailers for using their billing and handling services.