The effect of a change in a firm's credit terms from "net 30" to "2/10, net 30" on its own balance sheet is likely to be ____.
A) decreased accounts receivable
B) increased accounts receivable
C) decreased accounts payable
D) increased accounts payable

Question

Quizplus · Accepted Answer

Changing credit terms from "net 30" to "2/10, net 30" typically results in an increased incentive for customers to pay early, as they can take advantage of a 2% discount. This means that accounts receivable are likely to decrease, as more customers opt to pay within the 10-day period to receive the discount.

The Effect of a Change in a Firm's Credit Terms