An Incentive for Early Payment, a Discount, Can Be Added

question 17

Multiple Choice

An incentive for early payment, a discount, can be added. A 2 percent discount for payment within 10 days or full payment within 30 days is an example and is denoted as which of the following?

• A) 2/10, net 30
• B) 2/30, net 10
• C) 10/30, net 2
• D) 30/2, net 10
• E) 10/2, net 30

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent and salaries.

Traceable Fixed Expense

Fixed expenses that can be directly linked to a specific department, project, or segment within a company.

Net Operating Income

A calculation of a firm's profit, determined by deducting operational costs from the income gained through business activities.

Nearest Whole Number

A round-off method where decimal values are rounded to the closest integer.