A Firm's Credit Terms Specify "1/10 Net 30" and the Accounts

question 52

Multiple Choice

A firm's credit terms specify "1/10 net 30" and the accounts receivable days outstanding is 32 days. Which of the following can be concluded on the basis of this information?

• A) Most customers pay on time.
• B) The average customer pays two days late.
• C) All customers have paid within 32 days of purchase.
• D) All customers pay late.

---

Definitions:

Accrued Expenses

Expenses that have been incurred but not yet paid, recognized in accounting even in the absence of supplier invoices.

Incurred During

Refers to costs or expenses that happen within a specific time period.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate revenue and expenses to the correct periods.

Cash

Money in the form of coins or banknotes, especially that issued by a government.