The Terms "3/20, Net 60" Mean That

question 106

Multiple Choice

The terms "3/20, net 60" mean that:

• A) in effect, the buyer will pay a 27 percent interest rate if he takes 60 days to pay the invoice.
• B) the buyer must make a 3 percent down payment--with the balance due in 20 to 60 days.
• C) a 3 percent discount off the face value of the invoice is permitted if the bill is paid within 60 days--otherwise, the full face value is due within 20 days.
• D) the invoice is dated March 20 and must be paid within 60 days.
• E) None of the above is a true statement.

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Definitions:

Sarbanes-Oxley Act

A U.S. federal law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures, named after sponsors Senator Paul Sarbanes and Representative Michael Oxley.

Securities Fraud

Illegal practices involving the deception of investors or manipulation of financial markets, often leading to financial loss for investors.

Organizational Control

The processes, structures, and guidelines put in place within an organization to guide the behavior of its members and achieve its objectives.