Question

The credit terms 2 10 n 30 are interpreted as?

1) 2% discount if paid within 10 days, net amount due within 30 days
2) 2% discount if paid within 30 days, net amount due within 10 days
3) 10% discount if paid within 2 days, net amount due within 30 days
4) 10% discount if paid within 30 days, net amount due within 2 days

Answer 1

The credit terms 2 10 n 30 mean a 2% discount is available if payment is made within 10 days; otherwise, the full amount is due within 30 days.

Step-by-step explanation:

The credit terms 2 10 n 30 are interpreted as a 2% discount if the payment is made within 10 days, with the net amount due within 30 days.

This means the buyer can reduce the invoice amount by 2% if they pay within the 10-day window, but the full invoice amount is due by the 30th day if the discount is not utilized. It's important for businesses to understand these terms as it affects their cash flow and accounts receivable management.