A Form of Credit Term Is 3 / 15, 2

question 89

Multiple Choice

A form of credit term is 3 / 15, 2 / 25, N / 40, which means:
I. a 3% discount is allowed if the invoice is paid within 15 days of the invoice date
II. a 2% discount is allowed if the invoice is paid within 25 days of the invoice date
III. a partial payment will not be accepted after the 25th day following the invoice date

• A) both I and II
• B) I only
• C) III only
• D) II only

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Definitions:

Cash Flow

The aggregate measure of capital movement into and from a business, significantly affecting its solvency.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of maximization of shareholder wealth.

Income Tax Expense

The cost incurred by businesses and individuals due to earnings, computed based on tax rates and laws.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of wealth maximization.