Cash Discount Terms of 2/10, Net 30 on an Invoice

question 168

Multiple Choice

Cash discount terms of 2/10, net 30 on an invoice would-in effect-amount to borrowing at an annual interest rate of about ________ percent if the buyer did not pay the invoice for 30 days.

• A) 10
• B) 30
• C) 18
• D) 12
• E) 36

---

Definitions:

Multiple-Step Income Statement

A form of income statement that contains several sections, subsections, and subtotals.

Earnings Per Share

A financial metric indicating the portion of a company's profit allocated to each outstanding share of common stock.

Price-Earnings Ratio

A financial ratio that measures a company's current share price relative to its per-share earnings, used to evaluate the relative value of a company's shares in the market.

Partial Income Statement

An income statement that reports revenue, expenses, and net income over a specified period of time but does not include all of the details found in a comprehensive income statement.