The Credit Terms Offered to a Customer by a Business

question 126

Multiple Choice

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

• A) the customer must pay the bill within 10 days.
• B) the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date.
• C) the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date.
• D) two sales returns can be made within 10 days of the invoice date and no returns thereafter.

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Definitions:

Common Stock

Shares of ownership in a corporation, granting holders voting rights and a portion of profits in the form of dividends.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholders’ equity at a specific moment, showing the company's financial position.

Wages Payable

The total amount of wages that a company owes to its employees for work that has been completed but not yet paid for.

Common Stock

Common stock represents units of ownership interest or equity in a corporation and usually comes with voting rights to elect the board of directors.