Question

A seller offers a discount to a buyer to encourage prompt payment with terms 2/10, n/30. The buyer pays within the discount period. Which one of the following statements regarding the discount is correct? Multiple Choice From the perspective of the seller, this is a sales discount and will increase the amount of Cost of Goods sold reported. From the perspective of the buyer, this is a purchase discount and will reduce the cost of the inventory purchased. Credit terms of "2/10, n/30" means that if payment is made in two days, a 10% discount may be taken; if not paid within two days, the full invoice price will be due in thirty days. The buyer uses the term "sales discounts" and the seller uses the term "purchase discount" to describe the discount from their perspective.

          A seller offers a discount to a buyer to encourage prompt payment with terms 2/10, n/30.  The buyer pays within the discount period.
Which one of the following statements regarding the discount is correct?
Multiple Choice
From the perspective of the seller, this is a sales discount and will increase the amount of Cost of Goods sold reported.
From the perspective of the buyer, this is a purchase discount and will reduce the cost of the inventory purchased.
Credit terms of "2/10, n/30" means that if payment is made in two days, a 10% discount may be taken; if not paid within two days, the full invoice price will be due in thirty days.
The buyer uses the term "sales discounts" and the seller uses the term "purchase discount" to describe the discount from their perspective.

Added by Raquel N.

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