The Terms of an Invoice Are 3/10, N/25

question 32

Multiple Choice

The terms of an invoice are 3/10, n/25. This means that a:

• A)discount of 10% is allowed if the invoice is paid within 3 days.
• B)discount of 3% is allowed if the invoice is paid within 10 days.
• C)discount of 25% is allowed if the invoice is paid within 10 days.
• D)discount of 3% is allowed if the invoice is paid after 25 days.

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Definitions:

Residual Value

The forecasted financial value of an asset as it approaches the close of its effective life.

Depreciation Method

A systematic approach for allocating the cost of a tangible asset over its useful life to account for wear and tear, decay, or obsolescence.

Straight-Line Method

A depreciation method that allocates the cost of an asset evenly over its useful life.

Depreciation

Distributing the cost of a physical asset methodically over its period of utility.