What Is the Meaning of the Term 2/10 Net 30

question 10

Multiple Choice

What is the meaning of the term 2/10 net 30?

• A) If the invoice is paid within 10 days, a 2% discount can be taken. If the invoice is paid between 11 and 29 days, a 1% discount can be taken. After 30 days, the full invoice is due.
• B) If the invoice is paid within 2 days, a 10% discount can be taken; otherwise the full invoice is due in 30 days.
• C) If the invoice is paid within 2 days, a 10% discount can be taken; otherwise a 2% discount can be taken if the invoice is paid in 30 days.
• D) If the invoice is paid within 10 days, a 2% discount can be taken; otherwise the full invoice is due in 30 days.

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Definitions:

Statement of Changes

A financial statement that shows how the equity of a company has changed over a certain period due to various reasons like profits, losses, or distributions.

Deferred Tax Liability

A tax obligation due in the future for income that has been recognized in the financial statements before it is taxable by tax authorities.

Tax Depreciation

The depreciation expense deducted for tax purposes, allowing taxpayers to recover the cost of a property or asset used in a trade or business for income-producing purposes.

Accounting Depreciation

Represents the systematic allocation of the depreciable amount of an asset over its useful life, reflecting the wear and tear, obsolescence, or other declines in value as an expense in the income statement.