Question

What do you define in payment terms?

Note: There are 2 correct answers to this question.

1) Tolerance days
2) Cash discount
3) Posting key
4) Due date specification

Answer 1

In payment terms, the due date specification is when a payment is due, and tolerance days are an extra period allowed for making a payment without penalties. A credit card company's charges, such as $10 for late payment and $5 daily, are examples of charges applied after the tolerance period. The correct options are 1 and 4.

Step-by-step explanation:

In payment terms, businesses typically define due date specification and tolerance days. The due date specification refers to when the payment for a transaction, such as an invoice or a bill, is expected to be received.

Tolerance days are an allowance period that businesses may offer beyond the due date, during which a payment can still be made without incurring any late fees or penalties.

In the context of a credit card company, they might charge a $10 fee for late payment, which would be applied after the tolerance days have passed, and an additional $5 per day as a daily late fee thereafter.

For example, if a credit card company sets a due date for payment as the first of every month, with a 5-day tolerance period, payments made within 5 days after the due date would not lead to late fees.

However, payments made 6 or more days late would incur a $10 late fee, plus $5 for each additional day the payment remains unpaid. The correct options are 1 and 4.