Suppose Your fiRm Is Offered Terms of 2/10 Net 30

question 56

True/False

Suppose your firm is offered terms of 2/10 net 30 on its purchases. Assuming that your firm intends
to buy on credit, good cash management practice suggests that a rational purchaser should pay
between 20 and 30 days days?

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Definitions:

Operating Segment

A component of a company that engages in business activities from which it may earn revenues and incur expenses, and about which separate financial information is available.

Reportable Segment

A component of an enterprise that is distinguished by business activities, geographical areas, or products and services, requiring separate financial disclosure under accounting standards.

Revenue

The total income generated by a company from its normal business operations, before any expenses are deducted.