Which of the Following Early Payment Discounts Would Offer the Biggest

question 9

Multiple Choice

Which of the following early payment discounts would offer the biggest overall price reduction?

• A) 1/10, net 20
• B) 1/20, net 40
• C) 2/10, net 30
• D) 2/10, net 40
• E) 3/10, net 20

---

Definitions:

Anticipated Current Expenses

Projected expenses that a company expects to incur within the current accounting period.

Petty Cash Funds

A small amount of cash on hand used for paying minor expenses like office supplies or courier fees.

Minor Business Expenses

Smaller or less significant costs incurred in the operation of a business.

Bank Reconciliation

The process of matching and adjusting the balance of an account in an entity's ledger to the corresponding bank statement, identifying discrepancies.