A Firm That Offers Payment Terms of 2/10 Net 30

question 54

Multiple Choice

A firm that offers payment terms of 2/10 net 30 gives its customers:

• A) a 2% discount if the bill is paid on or before Day 30, otherwise an additional cost of 10% is applicable.
• B) a 20% discount if the bill is paid on or before Day 10, otherwise the entire bill is due by Day 30.
• C) a 30% discount if the bill is paid on or before Day 10, otherwise the entire bill is due by Day 2 of the consecutive month.
• D) a 10% discount if the bill is paid on or before Day 2, otherwise the entire bill is due by Day 30.
• E) a 2% discount if the bill is paid on or before Day 10, otherwise the entire bill is due by Day 30.

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Definitions:

Nonlinear

Referring to a relationship or process that cannot be accurately described by a straight line, indicating complex interactions.

Negatively Sloped

Characteristic of a line or curve on a graph that moves downward from left to right, indicating an inverse relationship between two variables.

Linear

A mathematical relationship or equation that describes a straight-line graph, often used to model simple proportional relationships between variables.

Seasonally Adjusted

Data that has been modified to eliminate effects of seasonal variations to provide a clearer view of trends.