What Does a Credit Policy of "2/10, Net 30" Mean

question 226

Short Answer

What does a credit policy of "2/10, net 30" mean?
That the selling company offers a 10 percent discount if the customer pays within 2 days. The customer has 30 days to pay the regular price.
That if the buyer pays the net bill within 10 days, a 2 percent discount will be given.
That the selling company offers a 2 percent discount if the customer pays within 10 days. The customer has 30 days to pay the regular price.
That the buyer has two months to pay the bill. If the buyer pays before that time, a 10 percent discount will be given.
None of these are correct.

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Definitions:

Assets

Economic resources owned or controlled by a business, expected to bring future benefits.

Assets

Resources owned by a company or individual, including cash, inventory, properties, and equipment, that are expected to provide future economic benefits.

Liabilities

Financial obligations a company owes to outside parties, such as loans, accounts payable, and mortgages.

Assets

Company-owned valuables that offer economic benefits and are expected to provide future profit.