Under terms 2/5, net 30, the discount applies if payment is made within the first five days.

• A. On the net due date
• B. Within the first five days
• C. Within the first ten days
• D. Within thirty days

Answer: (B)

Understanding trade credit terms helps you decide when it’s best to pay and how much you’ll owe. When you see terms like 2/5, net 30, it means you can take a 2% discount if you pay within five days of the invoice date; if you don’t take the discount, you must pay the full bill by the net due date of 30 days.

So the discount window is the first five days. That’s why paying within that period qualifies for the 2% reduction, while paying on or after day five does not. For example, on a $1,000 bill, paying within five days would reduce the balance to $980; paying after five days (even up to day 30) would require paying the full $1,000.

The other options don’t fit because they describe times outside the discount window or the overall due date: paying on the net due date would not receive the discount; paying within the first ten days or within thirty days ignores the fact that the 2% discount only applies if payment is made within the first five days.