Question

A buyer who acquires merchandise under credit terms of 1/10, n/30 has how many days after the invoice date to take advantage of the sales discount?

1) 10 days
2) 20 days
3) 30 days
4) 40 days

Answer 1

A buyer has 10 days after the invoice date to take advantage of a 1% sales discount under the credit terms 1/10, n/30, where '1/10' indicates the discount rate and timeframe, and 'n/30' indicates the net amount due date without a discount.

Step-by-step explanation:

The credit terms of 1/10, n/30 mean that the buyer has 10 days after the invoice date to take advantage of a 1% discount on the purchase price. If the buyer does not pay within the 10-day discount period, the net amount (total invoice) is due within 30 days from the invoice date, without any discount.

The '1/10' part refers to the discount offered, which is 1% of the total invoice amount, and 'n/30' specifies the net amount is due 30 days after the invoice date. Therefore, to take advantage of the sales discount, payment must be made within the first 10 days.