Sales revenues are usually considered earned when

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adjusting entries are made.

A company sells an item on account with credit terms of $2/10,$ n$/20.$ What is the meaning of these terms?

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An additional amount equal to $2$ percent of the invoice price must be paid if payment is not received within $10$ days; the account is overdue after $20$ days.

A $10$ percent cash discount may be taken if payment is made within $2$ days of the invoice date; otherwise the full amount is due in $20$ days.

A $2$ percent cash discount may be taken if payment is made within $10$ days of the invoice date; otherwise the full amount is due within $20$ days.

A $10$ percent cash discount may be taken if payment is made immediately; a $2$ percent discount may be taken if paid within $20$ days.