Jorge Is the Credit Manager for Timmy's Timbers, a Local

question 90

Multiple Choice

Jorge is the credit manager for Timmy's Timbers, a local landscaping company. Just recently, his mulch supplier noted on the invoice the terms of 3/15 net 30. What does this mean?

• A) Timmy's Timbers has to pay the invoice within 30 days. Late payment penalties are 3 percent if the bill is paid in less than 60 days, but they rise to 15 percent if payment is not made within 60 days.
• B) The entire amount is due in 30 days, but the 3 percent late penalty will only be imposed if payment is more than 15 days late.
• C) Timmy's Timbers Tree Farm must pay 15 percent of the amount due in 3 days; then the remaining 85 percent is due in 30 days.
• D) Timmy's Timbers will get a 3 percent cash discount if the balance owed to the supplier is paid within 15 days; otherwise the entire balance is due in 30 days.

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Definitions:

Workbook Problems

Exercises or assignments found in a workbook designed to practice or assess understanding of a subject or topic.

Comparative Advantage

An economic theory that explains how and why it benefits countries to specialize in producing goods in which they have a lower opportunity cost and to trade with others.

Constant Returns to Scale

A situation in production where increasing all inputs by a certain factor results in output increasing by the same factor.

Competitive Equilibrium

A market state where supply equals demand, resulting in an efficient distribution of goods and services without excess.