How many of the following statements regarding discounts are true?
If a company offers a discount to encourage prompt payment and the discount is taken, the discount reduces the amount of Net Sales.
Credit terms of "2/10, n/30" mean that if payment is made in two days, a 10% discount may be taken; if not paid within two days, the full invoice price will be due in thirty days.
The terms "sales discounts" and "purchase discounts" are used interchangeably by a company.

Question

Quizplus · Accepted Answer

The first statement is true as discounts taken reduce the net sales amount. The second statement is false; "2/10, n/30" means a 2% discount is available if paid within 10 days, not a 10% discount in two days. The third statement is false; "sales discounts" and "purchase discounts" are not interchangeable as they refer to different perspectives (seller vs. buyer).

How Many of the Following Statements Regarding Discounts Are True