If a firm grants credit with terms of 3/10, net 30, the customer
A)must pay a penalty of 3 percent when payment is made in more than 10 days after the sale.
B)must pay a penalty for 10 percent when payment is made in more than 3 days after the sale.
C)receives a discount of 3 percent when payment is made in less than 10 days after the sale.
D)receives a discount of 10 percent when payment is made in less than 3 days after the sale.

Question

Quizplus · Accepted Answer

The credit terms of 3/10, net 30 mean that the customer will receive a 3 percent discount if they pay within 10 days of the sale. If they do not take advantage of the discount, they must pay the full amount within 30 days of the sale. Therefore, there is no penalty for late payment, only a discount for early payment.

If a Firm Grants Credit with Terms of 3/10, Net