If the Terms of a Business Exchange Are 2/10 Net

question 27

Multiple Choice

If the terms of a business exchange are 2/10 net 30, this means that the transaction

• A) involves a cumulative discount if paid in 30 days.
• B) involves a noncumulative discount.
• C) offers a discount if the buyer lives within a ten-mile radius.
• D) price does not include the cost of freight.
• E) involves a cash discount if paid within ten days.

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Definitions:

Fixed Assets

Long-term tangible assets used in the operations of a business and not expected to be converted to cash in the near term.

Times Interest Earned

Times Interest Earned is a financial ratio that measures a company's ability to meet its debt obligations based on its current earnings before interest and taxes (EBIT).

Days' Sales in Inventory

A financial metric that shows the average duration it takes for a company to turn its inventory into sales.

Car Dealerships

Businesses specialized in selling new or used cars, often also offering maintenance services and financing options.