In: Accounting
When must a company pay on invoices dated October 20 according to these credit terms?
(A) Net 30date of invoice.
(B) Net 30 end of month.
(C) Net 45date of invoice.
(D) Net 45 end of month.
Answer A: Nov 19
Answer B: Nov 30
Answer C: Dec 4
Answer D: Dec 15
Workings for:
Answer A: Net 30 Date of Invoice = Oct 20 + 30 Days = Nov 19
Answer B: Net 30 End of Month = Oct End of Month + 30 Days = Oct 31 + 30 Days = Nov 30
Answer C: Net 45 Date of Invoice = Oct 20 + 45 Days = Dec 4
Answer D: Net 45 End of Month = Oct End of Month + 45 Days = Oct 31 + 45 Days = Dec 15
Explanation:
On an invoice, net 30 means payment is due thirty days after the invoice date and net 45 means payment is due forty five days after the invoice date.
Net 30 end of the month (EOM) means that the payment is due 30 days after the end of the month in which you sent the invoice and Net 45 end of the month (EOM) means that the payment is due 45 days after the end of the month in which you sent the invoice.
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