A large manufacturing firm has been selling on a 3/10, net 30 basis. The firm changes its credit terms to 2/20, net 90. What change might be expected on the balance sheets of the manufacturing firm?
A) Decreased receivables
B) Increased receivables
C) Increased payables
D) Decreased payables

Question

Quizplus · Accepted Answer

Changing the credit terms from 3/10, net 30 to 2/20, net 90 would likely result in increased receivables for the manufacturing firm. This is because customers now have a longer period (90 days instead of 30) to pay their invoices, which could lead to the firm having more outstanding receivables at any given time.

A Large Manufacturing Firm Has Been Selling on a 3/10