What Does a Credit Policy of "2/10, Net 30" Mean

question 201

Multiple Choice

What does a credit policy of "2/10, net 30" mean?

• A) That the selling company offers a 10 percent discount if the customer pays within 2 days. The customer has 30 days to pay the regular price.
• B) That if the buyer pays the net bill within 10 days, a 2 percent discount will be given.
• C) That the selling company offers a 2 percent discount if the customer pays within 10 days. The customer has 30 days to pay the regular price.
• D) That the buyer has two months to pay the bill. If the buyer pays before that time, a 10 percent discount will be given.
• E) None of these are correct.

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Definitions:

GDP Price Index

An economic metric that measures changes in the price level of all goods and services included in Gross Domestic Product.

Nominal Gross Domestic Product

a measure of a country's economic output (all goods and services produced) valued at current market prices, without adjusting for inflation.

Consumer Price Index

is a measure that examines the weighted average of prices of a basket of consumer goods and services, often used to assess inflation.

Annual Rate

Refers to the yearly interest rate or growth rate applied to investments, loans, or any financial product that calculates earnings or payments over a year.