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In credit terms of 3/15, n/45, the "3" represents the Oa. full amount of the invoice Ob. number of days in the discount period Oc. number of days when the entire amount is due Od. percent of the available discount for early payment 4

In credit terms of 3/15, n/45, the "3" represents the Oa. full amount of the invoice Ob. number of days in the discount period Oc. number of days when the entire amount is due Od. percent of the available discount for early payment 4

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Understanding Credit Terms When dealing with invoices in a business setting, understanding credit terms is crucial. Credit terms define the payment expectations set by the supplier, detailing the amount of time the purchaser has to pay for the goods and any applicable discounts for early payment. In this example, the credit terms are expressed as 3/15, n/45. Let's break down what these terms mean and focus on what the number "3" represents. --- **Multiple Choice Question:** In credit terms of 3/15, n/45, the "3" represents the: - a. full amount of the invoice - b. number of days in the discount period - c. number of days when the entire amount is due - d. percent of the available discount for early payment --- ### Detailed Explanation - **"3"** - This number represents the percentage discount available if the invoice is paid within the discount period. - **"15"** - This figure denotes the number of days within which the payment should be made to avail the discount. - **"n"** - Stands for net. - **"45"** - Indicates the total credit period, meaning the time frame within which the full payment is due, without any discount. --- **Correct Answer:** The "3" in the credit terms 3/15, n/45 represents the **percent of the available discount for early payment**. **Answer Choice:** d. percent of the available discount for early payment
Transcribed Image Text:### Understanding Credit Terms When dealing with invoices in a business setting, understanding credit terms is crucial. Credit terms define the payment expectations set by the supplier, detailing the amount of time the purchaser has to pay for the goods and any applicable discounts for early payment. In this example, the credit terms are expressed as 3/15, n/45. Let's break down what these terms mean and focus on what the number "3" represents. --- **Multiple Choice Question:** In credit terms of 3/15, n/45, the "3" represents the: - a. full amount of the invoice - b. number of days in the discount period - c. number of days when the entire amount is due - d. percent of the available discount for early payment --- ### Detailed Explanation - **"3"** - This number represents the percentage discount available if the invoice is paid within the discount period. - **"15"** - This figure denotes the number of days within which the payment should be made to avail the discount. - **"n"** - Stands for net. - **"45"** - Indicates the total credit period, meaning the time frame within which the full payment is due, without any discount. --- **Correct Answer:** The "3" in the credit terms 3/15, n/45 represents the **percent of the available discount for early payment**. **Answer Choice:** d. percent of the available discount for early payment
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