Asked by Ranjani Ramaswamy on Jul 22, 2024
Verified
Credit terms of 1/10, net 30 mean:
A) purchases made between the first and tenth day of the month must be paid by month end.
B) if the vendor is not paid within 30 days, 1% interest is charged for every 10 days thereafter.
C) the vendor will grant a discount of 10% for payment within 30 days.
D) the vendor will grant a 1% discount if paid within 10 days; otherwise the bill is due in full within 30 days.
Credit Terms
Conditions under which credit will be extended to a borrower, detailing repayment amounts and the timeframe of repayment.
Discount
Generally a reduction in price or value. In finance, a reduction in the present value of a future sum due to the action of interest.
Net
Refers to the amount remaining after all deductions are made, such as taxes, expenses, and costs.
- Familiarize oneself with the critical principles guiding the management of working capital and its components.
- Understand the terms and conditions of different types of short-term credit agreements.
Verified Answer
MK
murali kumarJul 27, 2024
Final Answer :
D
Explanation :
The credit terms of 1/10, net 30 mean that the vendor will grant a 1% discount if payment is made within 10 days, otherwise the bill is due in full within 30 days.
Learning Objectives
- Familiarize oneself with the critical principles guiding the management of working capital and its components.
- Understand the terms and conditions of different types of short-term credit agreements.