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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

What does the “2” in 2/10, n/30 mean?

  1. a. Pay in 2 days to ensure early payment
  2. b. 2% discount for early payment within 10 days
  3. c. 2% extra payment due if paid between 10 days and 30 days
  4. d. $2 discount if paid within 10 days
  5. e. None of the above

To determine

Identify the correct option that denotes “2” in 2/10, n/30.

Explanation

Sales discount:

It refers to the amount given as concession to the buyer by the seller for prompt payments

Credit terms:

It refers to the terms of payment offered by the seller to the buyer.

2/10, n/30 refers to the sales discount given to the buyer by the seller in case of prompt payment. 2/10, n/30 means the following:

  • “2” is the discount percentage offered to the purchaser by the seller.
  • “10” refers to the number of days available for the buyer to pay and take advantage of the discount...

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