(c) The requirement is to evaluate credit terms to made
sound cash management decisions. Answer (c) is correct because
a firm should take advantage of the cash discount and pay
on the last day of the discount period, which is day 10. Answers
(a) and (b) are incorrect because “2” is the amount of the
percentage discount; not the discount period. Answer (d) is
incorrect because if a firm pays bills on the final due date, it will
not have taken advantage of cash discounts which are very lucrative.