A Purchaser Was Offered Terms of Trade Credit of 2/10

question 56

Multiple Choice

A purchaser was offered terms of trade credit of 2/10, net 30, with an invoice date of January 1.Which one of the following acts threatens creditworthiness?

• A)Taking the discount, paying on January 5.
• B)Taking the discount, paying on January 10.
• C)Ignoring the discount, paying on January 30.
• D)Ignoring the discount, paying on February 9.

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Definitions:

Absolute Tax Payments

The total amount of taxes paid by an individual or entity without considering the tax rate or income.

Progressive Tax

A tax system in which the tax rate increases as the taxable amount increases, with higher earners paying a higher percentage of their income in taxes.

Social Security Tax

Social Security tax is a payroll tax collected to fund the Social Security program, which provides retirement, disability, and survivorship benefits to qualifying individuals.

Federal Personal Income Tax

A tax levied by the U.S. federal government based on an individual's income, including wages, salaries, and investments.