Virginia Supply Offers Their Customers Trade Credit with Terms 2/15

question 138

Multiple Choice

Virginia Supply offers their customers trade credit with terms 2/15 net 30. This implies that:

• A) Virginia's customers have very little incentive to pay within the discount period.
• B) paying within 30 days will let a customer deduct 15% off the invoice price.
• C) most customers will pay their bill within 2 days in order to take the maximum discount.
• D) the annual financing cost of failing to pay within 15 days is about 48%.

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Definitions:

Wealth

The abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions.

Flow Measure

A type of economic measurement that is recorded over a specific period of time, such as income or expenditure.

Demand Curves

A graphical representation showing the relationship between the price of a good and the quantity of that good consumers are willing to purchase at different prices.

Complements

Products that are frequently consumed in conjunction with one another, where a rise in demand for one results in a boost in demand for the other.