Florida · Most missed · Episode 9

One Percent, Not Ten

2:07

The transcript is below. The full episode plays in the EstatePass CT dashboard.

Chapters

0:00The question
0:37The terms
0:50The math
1:11The answers
1:50Recap

In short

Terms of 1/10, net 30 mean a 1 percent discount if the invoice is paid within 10 days; otherwise the full amount is due in 30 days. On a $42,600 invoice the discount is $426, so the check is $42,174, or $42,600 × 0.99. Taking 10 percent off ($38,340) or paying the full amount ($42,600) are the common mistakes.

1/10: 1 percent off within 10 days.
Net 30: the full amount within 30 days.
Check = invoice × (1 − discount).

Transcript

0:00The question

This is the most missed accounting question in our Florida bank. The math is easy. Reading the terms is where people slip. A supplier invoice is $42,600, with terms 1/10, net 30. 15 of 17 people missed it. 7 took 10 percent off, and 7 took nothing off at all. Pause. Paid within the discount period, what check do you write?

0:37The terms

Read the terms left to right. 1/10: one percent off, if you pay within 10 days. Net 30: otherwise, the full amount is due in 30 days.

0:50The math

One percent of $42,600 is $426. So the check is $42,600 minus $426: $42,174. Or in one step: multiply by 0.99.

1:11The answers

Now the answers. A, $38,340: that takes ten percent off. Out. D, $42,600: the full amount, as if you paid late. Out. C, $42,426: it takes off $174, not the $426 discount. Out. That leaves B: $42,174. The first number is the percent. The second is the days.

1:50Recap

1/10, net 30: one percent off within ten days, the full amount by thirty. Next: the quick ratio. Subscribe so you catch it.

Sources

Florida Business & Finance bank question fl-bf-d-acct-prod-t01-006, worked

Independent study material. EstatePass is not affiliated with NASCLA, PSI, Pearson VUE, the Florida CILB or the CSLB, and nothing here is legal advice. Any jobs and companies in our episodes are fictional.