Which one of the following statements regarding sales discounts is correct?
A. A sales discount is subtracted from Sales Revenue whereas a purchase discount is added to Cost of Goods Sold.
B. Credit terms of "2/10, n/30" means that if payment is made in two days, a 10% discount may be taken; if not paid within two days, the full invoice price will be due in thirty days.
C. The terms "sales discounts" and "purchase discounts" are used interchangeably by a company.
D. If a company offers a discount to encourage prompt payment and the discount is taken, the discount reduces the amount of net sales.
Answer: D
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