a firm sells on terms of 2/10 net 30 days, and its DSO is 28 days, then the fact that the 28-day DSO is less than the 30-day credit period tells us that the credit department is functioning efficiently and there are no past-due accounts.

Question

Quizplus · Accepted Answer

A DSO of 28 days being less than the 30-day credit period does not necessarily indicate that there are no past-due accounts; it simply means that, on average, payments are being collected within 28 days. Some accounts could still be past due.

A Firm Sells on Terms of 2/10 Net 30 Days