BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Reduction on the amount of bills to encourage prompt payment of bills
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Amount in Ringgit
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Offered when the customers make a payment within the stipulated period of time
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Offered in cash discount term such as, 3/10, 2/20, n/30
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Amount in percentage
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Detailed explanation-1: -What is 2/10 net 30? 2/10 net 30 is a trade credit extended to the buyer from the seller. A buyer will receive a 2% discount on the net amount if they pay the invoice in full within the first ten days of the invoice date. Otherwise, the full invoice amount is due in 30 days without a discount.
Detailed explanation-2: -What does ‘3/10 net 30’ mean? Sometimes, net 30 invoice terms are coupled with a discount. This discount is intended to encourage customers to pay more quickly. So, when you see an invoice that states ‘3/10 net 30’, it means that customers can receive a 3% discount if they pay within 10 days.
Detailed explanation-3: -Lesson Summary The basic formula for cash discount can be expressed as CD = P*R, which stands for cash discount = purchase price * discount rate.
Detailed explanation-4: -Specifically, 4/10 N/30 indicates that the customer is eligible to receive a 4% discount if they pay within 10 days. If the payment is not received within 10 days, the customer must pay the full invoice amount within 30 days.