Accounting for IGCSE & O level - Advanced Principles (Section 1 - No. 41)
Is an increase in the trade payables payment period good or bad for business?
Good: The business can previously taking longer to pay supplies. The business may achieve cash discount for paying promptly. This will increase its profits.
Bad: The business can previously taking longer to pay supplies. The business may achieve cash discount for paying promptly. This will increase its profits.
Good: The business can previously taking longer to pay supplies. The business may achieve cash discount for paying promptly. This will reduce its profits.
Bad: The business can previously taking longer to pay supplies. The business may achieve cash discount for paying promptly. This will reduce its profits.
Explanation
An increase in the trade payables payment period is generally good for a business as it can delay payments and potentially lead to cash discounts, increasing profits.
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