A Company Has Days' Payable Outstanding of 70 Days

question 30

Multiple Choice

A company has days' payable outstanding of 70 days. If credit terms of purchases are 2/10, net 30, is the company paying accounts payable on a timely basis?

• A)Yes, days' payable outstanding exceeds the net period of 30 days.
• B)Yes, days' payable outstanding exceeds the discount period of 10 days and the net period of 30 days.
• C)No, days' payable outstanding exceeds the discount period of 10 days and the net period of 30 days.
• D)There is not enough information to make an assessment.

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Definitions:

Reformation

The process of modifying a legal document or agreement to correct errors or reflect the true intentions of the parties involved.

Written Insurance Policy

A formal document issued by an insurer that outlines the terms, coverage, and conditions of the insurance agreement.

Contract Term

A period during which a contract is operational and its conditions are applicable.

Automobile Insurance

A contract between an individual and an insurance company to cover financial loss related to car incidents, such as accidents, theft, or damage.