The Terms '2/7' Appearing on an Invoice for the Sale/purchase

question 26

Multiple Choice

The terms '2/7' appearing on an invoice for the sale/purchase of inventory means that the buyer:

• A) will receive a 2% discount if paid within 7 days of the invoice date;
• B) will receive a 7% discount if paid within 2 days of the invoice date;
• C) has 7 days from the invoice date to pay or will be charged a 2% surcharge;
• D) has 2 days from the invoice date to pay or will be charged a 7% surcharge.

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Definitions:

Given Unit

A specific quantity or measure that serves as a standard or reference for tasks or calculations in various contexts.

Cash Discount

is a reduction in the invoice amount offered to purchasers as an incentive for early payment, improving cash flow.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Gross Amount

The total sum before any deductions are made, such as taxes, discounts, or expenses.