Question

What is the meaning of the term 'two ten, net thirty'?

1) A discount of 2% is offered if payment is made within 10 days, otherwise the full amount is due within 30 days.
2) A discount of 10% is offered if payment is made within 2 days, otherwise the full amount is due within 30 days.
3) A discount of 30% is offered if payment is made within 2 days, otherwise the full amount is due within 10 days.
4) A discount of 30% is offered if payment is made within 10 days, otherwise the full amount is due within 2 days.

Answer 1

The term '2/10, net 30' means a buyer can take a 2% discount on the invoice amount if payment is made within 10 days; otherwise, the full amount is due within 30 days.

Step-by-step explanation:

The term '2/10, net 30' is a common credit term used in business and invoicing that represents a sales discount and payment policy. It means that a buyer can take a 2% discount on the invoice amount if the payment is made within 10 days.

If the buyer opts not to take advantage of the discount, the full invoice amount is due within 30 days without any discount. This is a form of a sales incentive to encourage early payment.

So the correct interpretation of '2/10, net 30' is: A discount of 2% is offered if payment is made within 10 days, otherwise the full amount is due within 30 days. Therefore, the accurate answer to the student's question is option 1.