What Is the Meaning of the Term 2/10 Net 30

question 10

Multiple Choice

What is the meaning of the term 2/10 net 30?

• A) If the invoice is paid within 10 days, a 2% discount can be taken. If the invoice is paid between 11 and 29 days, a 1% discount can be taken. After 30 days, the full invoice is due.
• B) If the invoice is paid within 2 days, a 10% discount can be taken; otherwise the full invoice is due in 30 days.
• C) If the invoice is paid within 2 days, a 10% discount can be taken; otherwise a 2% discount can be taken if the invoice is paid in 30 days.
• D) If the invoice is paid within 10 days, a 2% discount can be taken; otherwise the full invoice is due in 30 days.

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Definitions:

Withdrawals

The act of taking out cash or other assets from a business by the owner for their personal use.

Capital

Capital refers to financial assets or the financial value of assets, such as funds held in deposit accounts, as well as the physical factors of production including machinery and buildings.

Prepaid Insurance Expense

The portion of insurance premiums that have been paid in advance and are recognized as an asset until the insurance coverage relates to future periods.

Advertising Expense

Costs incurred in promoting products or services to attract sales or increase brand awareness.