Suppose Your Firm Is Offered Terms of 2/10 Net 30

question 15

True/False

Suppose your firm is offered terms of 2/10 net 30 on its purchases. Assuming that your firm intends to buy on credit, good cash management practice suggests that a rational purchaser should pay between 20 and 30 days days?

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Definitions:

Installment

A method of paying for goods or services or repaying a loan through regular, scheduled payments.

Accounting Equation

The basic formula of double-entry accounting: Assets equal Liabilities plus Equity.

Accounting Equation

The fundamental equation of double-entry bookkeeping: Assets = Liabilities + Equity, representing the financial position of a business.

Liabilities

Financial obligations or debts owed by a business to another entity, payable in the future.