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CSEET · Business Communication · Common Business Terminologies

An invoice carries the terms '2/10, net 30'. A buyer with an invoice of ₹50,000 pays on the eighth day. What does the buyer pay, and what is the term called?

The buyer pays ₹49,000 because payment on day eight falls within the ten-day window, earning a 2% discount of ₹1,000 on ₹50,000. This is a cash discount, given for prompt settlement, and not a trade discount.

  1. A₹49,000, availing a cash discountCorrect
  2. B₹49,000, availing a trade discount
  3. C₹50,000, because discount applies only after day 30
  4. D₹51,000, as a penalty for early payment

Explanation

'2/10, net 30' offers 2% discount if paid within 10 days, otherwise full amount is due in 30 days. Payment on day 8 earns 2% of ₹50,000 = ₹1,000, so ₹49,000 is paid. This is a cash discount because it depends on prompt payment, not a trade discount on list price.

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