Q5-9RQ

Question

What would the credit terms of “2/10, n/EOM” mean?

Step-by-Step Solution

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Answer

The credit term “2/10, n/EOM means that the company can deduct 2% from the bill amount if the payment is made within 10 days.

1Meaning of Credit Term

In accounting, credit term refers to the payment terms associated with an invoice, which are mentioned on it. It presents an agreement between the buyer and seller regarding the payments required to be received against goods sold on credit.

2The credit terms of “2/10, n/EOM” mean

The credit terms "2/10, n/EOM" means that the company can avail 2% discount on the total bill due (excluding the freight amount) if it makes the payment within days of the date mentioned on the invoice. In addition, if the company does not make the payment within ten days, then the entire amount will become due at the end of the month.

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