Question

What do credit terms of 4/10, n/30 mean in regard to a purchase?

a) 4% discount if paid within 10 days, net amount due within 30 days
b) 10% discount if paid within 4 days, net amount due within 30 days
c) 30% discount if paid within 4 days, net amount due within 10 days
d) 4% discount if paid within 30 days, net amount due within 10 days

Answer 1

Credit terms 4/10, n/30 mean a 4% 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 of 4/10, n/30 mean that a buyer can receive a 4% discount on the invoice price if payment is made within 10 days. If the buyer does not take advantage of this discount, the net (full) amount of the invoice is due within 30 days, with no discount applied. Hence, the correct answer to the student's question is a) 4% discount if paid within 10 days, net amount due within 30 days.