A 2/10,net 30 credit policy:
A)is an expensive form of short-term credit if a buyer foregoes the discount.
B)provides cheap financing to the buyer for 30 days.
C)is an inexpensive means of reducing the seller's collection period if every customer takes the discount.
D)tends to have little effect on the seller's collection period.
E)tends to increase a firm's investment in receivables as compared to a straight net 30 policy.

Question

Quizplus · Accepted Answer

The 2/10, net 30 credit policy provides a 2% discount to customers who pay within 10 days, but if a buyer foregoes the discount, it becomes an expensive form of short-term credit.

A 2/10,net 30 Credit Policy