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:

Accounting Equation

The foundational principle of accounting that states assets equal liabilities plus equity.

Accounts Payable

Liabilities representing amounts owed by a company to creditors for purchases of goods and services on credit.

Limited Liability Company (LLC)

A business form consisting of one or more persons or entities filing an operating agreement with a state to conduct business with limited liability to the owners, yet treated as a partnership for tax purposes.

Separate Legal

Refers to a legal entity, such as a corporation, that is legally distinct from its owners.