The Cash Discount Terms "2/10, Net 30" Mean That

question 135

Multiple Choice

The cash discount terms "2/10, net 30" mean that:

• A) the invoice is dated February 10 and must be paid by February 30.
• B) the buyer will, in effect, be borrowing at a 36 percent annual interest rate if he takes 30 days to pay the invoice.
• C) the buyer must make a 2 percent down payment-with the balance due in 10 to 30 days.
• D) a 2 percent discount off the face value of the invoice is permitted if the bill is paid within 30 days.
• E) None of these alternatives is correct.

---

Definitions:

Average Tax Rates

The ratio of the total amount of taxes paid to the total income, indicating the percentage of income that goes towards taxes.

Regressive Tax

A tax system that takes a smaller percentage of income from individuals as their income increases, often considered less fair to lower-income earners.

Payroll Taxes

Financial obligations required from both employers and employees, pegged to a fraction of the payroll expenses incurred by employers.

Federal Tax Revenues

The income received by the federal government from taxes and other sources used to fund public expenditures.