The discount terms are 1/10, n/30 which indicates a 1% discount if paid within 10 days but the full amount is due otherwise. Since the bill is paid on the tenth day (or sooner), the buyer gets the 1% discount.
When a purchaser is offered credit terms of 1/10 n 30 The discount period is quizlet?
A buyer who acquires merchandise under credit terms of 1/10, n/30 has 20 days after the invoice date to take advantage of the cash discount. Discounts taken by the buyer for early payment of an invoice are called sales discounts by the buyer.
What does 2/10 mean with respect to credit terms of 2/10 N 30 a a discount of 2% will be allowed if invoice is paid within 10 days from the date of the invoice b an interest of 2% will be charged if invoice is paid?
What does “2/10” mean, with respect to “credit terms of 2/10, n/30”? A) A discount of 2% will be allowed if invoice is paid within 10 days from the date of the invoice .
When a company is offered terms 2/10 N 30 what discount has it been offered if it pays within 10 days?
2/10 net 30, defined as the trade credit in which clients can opt to either receive a 2 percent discount for payment to a vendor within 10 days or pay the full amount (net) of their accounts payable in 30 days, is extremely common in business to business sales.
When making a sale that offers terms such as 2/10 N 30 to the customer?
Definition: 2 10, Net 30 is a cash discount term where customers have 30 days to pay for a purchase but can receive a two percent discount if the entire purchase paid in full within ten days.
What is a difference between the profit margin and the gross profit rate quizlet?
The gross profit rate is computed by dividing net sales by gross profit and the profit margin is computed by dividing net sales by net income. The gross profit rate will normally be higher than the profit margin ratio. The gross profit rate will normally be higher than the profit margin ratio.
Which one of the following will result in gross profit?
Sales less cost of goods sold equals gross profit. Subtracting operating expenses from gross profit equals net income. Working backwards, net income ($15,000) plus operating expenses ($20,000) results in a gross profit of $35,000.
Are Bill and invoice the same?
An invoice is sent, while a bill is received. When you send an invoice to a customer, the customer then receives it as a bill- it’s all about the perspective. In short, an invoice means you are requesting money, and a bill means that you are required to pay for something.
What is the order of the subtotals that appear on a multi step income statement?
What is the order of the subtotals that appear on a multi-step income statement? Gross Profit, Operating Income, Net Income, Other Revenues and Expenses.
Which of the following is the correct formula for calculating gross profit percentage?
Gross profit percentage equals gross profit divided by net sales revenue.
How do you calculate a 2/10 net 30 discount?
Subtract the discount percentage from 100% and divide the result into the discount percentage. For example, under 2/10 net 30 terms, you would divide 2% by 98% to arrive at 0.0204.
What do the terms 2/10 N 30 mean?
2/10 net 30 means that buyers are eligible to get a 2% discount on trade credit if the amount due is paid within 10 days.
What does the term 3/10 n 30 mean?
What does ‘3/10 net 30’ mean? Sometimes, net 30 invoice terms are coupled with a discount. This discount is intended to encourage customers to pay more quickly. So, when you see an invoice that states ‘3/10 net 30’, it means that customers can receive a 3% discount if they pay within 10 days.
What does N 30 mean in accounting?
On an invoice, net 30 means payment is due thirty days after the invoice date. For example, if an invoice is dated January 1 and it says “net 30,” then the payment is due on or before January 30.
What is an allowance for doubtful accounts?
The allowance for doubtful accounts is a contra account that records the percentage of receivables expected to be uncollectible. The allowance is established in the same accounting period as the original sale, with an offset to bad debt expense.
What is a cash discount?
Cash discounts refer to an incentive that a seller offers to a buyer in return for paying a bill before the scheduled due date. In a cash discount, the seller will usually reduce the amount that the buyer owes by either a small percentage or a set dollar amount.