Having examined the income statements for the last 2 years, the manager of a small business noticed
Question:
Having examined the income statements for the last 2 years, the manager of a small business noticed that, in spite of the prosperous result for the current year, the income recognised as ‘discount received’ had fallen sharply from the previous year. Upon investigation, she found that the new employee appointed to look after payment of the accounts had not paid several invoices within the discount period, giving the reason that it was not worth the effort because the discount to be received was only 1% on some invoices, and 2% on others, if paid within 10 days. Discuss the importance (or otherwise) of paying creditors’ accounts within the discount period.
Step by Step Answer:
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett