A Firm Is Offered Credit Terms of 2/10 Net 45

question 81

Multiple Choice

A firm is offered credit terms of 2/10 net 45 by most of its suppliers but frequently does not have the cash available to take the discount. The firm has a credit line available at a local bank at an interest rate of 12 percent. The firm should

• A) take the cash discount and pay on the first day of the cash discount period.
• B) take the cash discount, financing the purchase with the line of credit, the cheaper source of funds.
• C) give up the cash discount, financing the purchase with the line of credit.
• D) take the cash discount and pay on the 45th day after the date of sale.

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Definitions:

Communication Openness

The willingness and capacity to share ideas, thoughts, and feelings openly in conversations, fostering an environment of transparency and trust.

Organizational Effectiveness

Measures how well an organization achieves its stated goals and objectives efficiently, maintaining high performance over time.

Performance Appraisal

A systematic evaluation process through which an employee's job performance is assessed, typically by their supervisor, against certain criteria.

Communication Networks

Systems of interconnected individuals or devices that facilitate the exchange of information and data.