A form of credit term is 3 / 15, 2 / 25, N / 40, which means:
I. a 3% discount is allowed if the invoice is paid within 15 days of the invoice date
II. a 2% discount is allowed if the invoice is paid within 25 days of the invoice date
III. a partial payment will not be accepted after the 25th day following the invoice date

Question

A form of credit term is 3 / 15, 2 / 25, N / 40, which means:
 I. a 3% discount is allowed if the invoice is paid within 15 days of the invoice date 
II. a 2% discount is allowed if the invoice is paid within 25 days of the invoice date 
III. a partial payment will not be accepted after the 25th day following the invoice date

Quizplus · Accepted Answer

Choice I and II are correct as they correctly describe the credit terms.

Choice III is incorrect as it is not a correct interpretation of the credit terms. The N/40 credit term means that the net (full) payment is expected within 40 days from the invoice date. It does not imply anything about partial payments.

A Form of Credit Term Is 3 / 15, 2