An invoice received from a supplier for $8,000 on January 1 with terms 1/15,n/30 means that the company should pay
A)$7,920 before the end of January.
B)either $7,920 before January 16 or $8,000 before the end of the month.
C)$8,000 between January 2 and January 16.
D)$6,800 before January 16.

Question

Quizplus · Accepted Answer

The terms 1/15, n/30 mean that a 1% discount can be taken if payment is made within 15 days, otherwise the full amount is due within 30 days. So the company can either pay $7,920 (1% discount from $8,000) before January 16 or pay the full $8,000 before the end of January. Option A is incorrect because the discount is not applied if the payment is made between January 16 and the end of January. Option C is incorrect because the payment window is between January 1 and January 16, not January 2. Option D is incorrect because it does not take into account the discount option.

An Invoice Received from a Supplier for $8,000 on January