If a firm's payment terms for sales made on account to its customers were 2/10, n30, the number of days' sales in accounts receivable would be expected to be:
A)less than 10.
B)between 10 and 25.
C)between 25 and 40.
D)over 40.

Question

Quizplus · Accepted Answer

The payment terms 2/10, n30 indicate that customers are encouraged to pay within 10 days to receive a discount, but the full payment is due in 30 days. Therefore, the average collection period is likely to be between 10 and 25 days, as some customers will take advantage of the discount while others will pay closer to the 30-day deadline.

If a Firm's Payment Terms for Sales Made on Account