If a firm with credit terms of 2/10 net 30 were to change its terms to 2/10 net 60,the result would probably be
A) more customers would take advantage of the cash discount.
B) fewer customers would take advantage of the cash discount.
C) increased accounts receivable turnover.
D) a reduction in safety stock.

Question

Quizplus · Accepted Answer

By increasing the net period from 30 to 60 days, customers have more time to pay their balance, so they may not feel the urgency to take advantage of the early payment discount. This means that the number of customers taking advantage of the discount may decrease, resulting in fewer cash inflows.

If a Firm with Credit Terms of 2/10 Net 30