SAP Financial Accounting (SAP FI) Practice Exam

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What do payment terms in SAP primarily calculate?

Vendor payment methods
Cash discounts and invoice due dates
Interest on late payments
Vendor credit limits

The correct answer is: Cash discounts and invoice due dates

Payment terms in SAP primarily calculate cash discounts and invoice due dates. This functionality allows businesses to manage their payment processes more efficiently by specifying the timeframes for settling invoices and the associated discounts for early payments. Cash discounts incentivize early payments, which helps improve cash flow for the business. For example, a payment term might stipulate that if the invoice is paid within a specified number of days, a certain percentage discount can be applied. Additionally, the payment terms determine when the invoice is due, aiding in accounts payable management and ensuring that obligations are met in a timely manner. While other options relate to aspects of financial management, they do not encapsulate the primary role of payment terms. Payment methods, interest calculations, and credit limits represent different functionalities within SAP that serve distinct purposes, but they are not directly defined or influenced by the payment terms settings.