If a Supplier Is Offering Trade Credit of 1/10 Net

question 34

Multiple Choice

If a supplier is offering trade credit of 1/10 net 30,and a buyer chooses not to take the discount,when should they pay,assuming that they wish to stay on good terms with the supplier?

• A)anytime before day 10
• B)on day 10
• C)on day 30
• D)any time after day 30
• E)any time between day 10 and day 30

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Definitions:

Merchandise

Goods bought and sold in the course of business operations.

Periodic Inventory System

An accounting system that records inventory purchases during the accounting period but waits until the end of the period to adjust the inventory balances and record cost of goods sold.

Gross Method

An accounting practice for recording the full invoice amount of a sale without deducting any discounts offered.

Merchandise Return

The process by which a customer returns previously purchased merchandise back to the seller, often due to defects or dissatisfaction.