In a perpetual inventory system, credit terms of 2/10, n/60 mean that the buyer may take a 2% discount if payment is made within 10 days; otherwise, the net (full) amount is due within 60 days.

• A. A 2% discount is available if paid within 10 days; otherwise, the full amount is due within 60 days.
• B. A 2% discount is available if paid within 60 days; otherwise, the full amount is due within 10 days.
• C. A 2% discount is available if paid within 10 days, and the remaining balance is due within 60 days with interest.
• D. A 10% discount is available if paid within 2 days; otherwise, the full amount is due within 60 days.

Answer: (A)

Verified step by step guidance

1. Understand the meaning of credit terms notation: In the terms '2/10, n/60', '2/10' means a 2% discount is offered if payment is made within 10 days.
2. Recognize that 'n/60' means the net (full) amount is due within 60 days if the discount period is missed.
3. Interpret the terms as: the buyer can take a 2% discount by paying within 10 days; if not, the full invoice amount is due within 60 days without any discount.
4. Eliminate options that incorrectly state the discount period or discount percentage, such as a 2% discount available within 60 days or a 10% discount within 2 days.
5. Confirm that the correct interpretation matches the option stating: 'A 2% discount is available if paid within 10 days; otherwise, the full amount is due within 60 days.'