PRIN.OF CORPORATE FINANCE >BI<
12th Edition
ISBN: 9781260431230
Author: BREALEY
Publisher: MCG CUSTOM
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Question
Chapter 30, Problem 3PS
a)
Summary Introduction
To discuss: The manner in which the event “a” affects the terms lag and due lag.
b)
Summary Introduction
To discuss: The manner in which the event “b” affects the terms lag and due lag.
c)
Summary Introduction
To discuss: The manner in which the event “c” affects the terms lag and due lag.
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Question The average collection period is the average amount of time that elapses from a credit sale until the company can use the payment (collection) of the sale.
True or false?
Which of the following refers to the ability of a firm to buy repeatedly from a supplier on trade credit without re-applying for credit?
Select one:
a.
Net terms
b.
Cash discount
c.
Open account
d.
Present value of delayed payment
Which of the following is indicative of discounts received from a supplier on account of early settlement of an amount owed as a result of a credit purchase?
a) Quantity discount
b) Value discount
c) Early settlement discount
Chapter 30 Solutions
PRIN.OF CORPORATE FINANCE >BI<
Ch. 30 - Inventory What are the trade-offs involved in the...Ch. 30 - Prob. 2PSCh. 30 - Prob. 3PSCh. 30 - Prob. 4PSCh. 30 - Prob. 5PSCh. 30 - Prob. 6PSCh. 30 - Prob. 7PSCh. 30 - Credit policy How should your willingness to grant...Ch. 30 - Cash management Complete the passage that follows...Ch. 30 - Prob. 10PS
Ch. 30 - Prob. 11PSCh. 30 - Prob. 12PSCh. 30 - Prob. 13PSCh. 30 - Prob. 14PSCh. 30 - Credit terms Phoenix Lambert currently sells its...Ch. 30 - Prob. 16PSCh. 30 - Prob. 17PSCh. 30 - Prob. 18PSCh. 30 - Prob. 19PSCh. 30 - Prob. 20PSCh. 30 - Prob. 21PSCh. 30 - Prob. 22PSCh. 30 - Prob. 23PSCh. 30 - Prob. 24PSCh. 30 - Prob. 25PSCh. 30 - Money-market yields In Section 30-4 we described a...Ch. 30 - Money-market yields Look again at the previous...Ch. 30 - Prob. 29PSCh. 30 - Prob. 30PSCh. 30 - Prob. 31PSCh. 30 - Prob. 33PS
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Similar questions
- Is it true that, when one firm sells to another on credit, the seller records the transaction as an account receivable while the buyer records it as an account payable and that, disregarding discounts, the receivable typically exceeds the payable by the amount of profit on the sale?arrow_forwardKate Trading made an early payment to its suppliers to take advantage of the discount offered by the supplier. What account is most likely used for the discount that is being acquired by Kate Trading? cash discount trade discount sales discount purchase discountarrow_forward1. What do you call to a document issued when you purchase or sold on account (credit basis)? 2. It is the nominal price of an item before any trade discount.arrow_forward
- Which of the following would not result in a reduction of the amount invoiced to a customer when a credit sale is made? A. Quantity discount B. Cash-free discount C. Sales discountD. Two-for-one specialarrow_forwardWhat is the difference between free trade credit and costly trade credit? What is theformula for finding the nominal annual cost of trade credit? Does the nominal costof trade credit understate the effective cost? Explain.arrow_forwardThe following relate to trade discounts: 1. Trade discounts are given to customers to induce them to pay promptly. II. Trade discounts are not taken up in the books because they are merely adjustments to establish the final selling price A. false, true B. true, true C. true, false D. false, falsearrow_forward
- Which of the following statements is correct about credit period? A. If a customer purchases goods within the credit period, a cash discount will be allowed to the customer B. If a customer settles the payment within the credit period, a cash discount will be allowed to the customer C. It refers to the period in which customers must settle their debts due D. It refers to the period in which customers need to settle one-third of the debts in order to avoid further interests chargedarrow_forward2.-When deciding to accept a cash discount from a supplier, on what day is it advisable to take the financing? A) On the last day of the discount period, to see if they are able to meet the discount. B) On the first day of the discount period, so why wait? C) On any day of the discount period D) In the middle of the discount period, so there is no risk.arrow_forwardEnter the letter for each term in the blank space beside the definition that it most closely matches. Sales discount Credit period Discount period FOB destination FOB shipping point Gross profit Merchandise inventory Purchase discount Cash discount Trade discount _______ 1.Goods a company owns and expects to sell to its customers. _______ 2.Time period that can pass before a customer’s payment is due. _______ 3.Seller’s description of a cash discount granted to buyers in return for early payment. _______ 4.Reduction below list or catalog price that is negotiated in setting the price of goods. _______ 5.Ownership of goods is transferred when the seller delivers goods to the carrier. _______ 6.Purchaser’s description of a cash discount received from a supplier of goods. _______ 7.Reduction in a receivable or payable if it is paid within the discount period. _______ 8.Difference between net sales and the cost of goods sold.…arrow_forward
- a) Explain in detail different types of documentation that the business would expect to change hands in purchase, sales, purchase returns and sales returns etc. b) Show the model of atleast one Credit Sales invoice, Purchase invoice, Debit note and Credit note. (you can use imaginary figure) c) What are policies for trade discount/cash discount, Is there any products are subject to trade discount and why? Explain the terms and conditions in detail.arrow_forwardIf a firm's supplier has a credit policy of 1/10/45, what is the nominal cost of trade credit? a. 1% b. 99% c. 10.83% d. 11.05% e. None of the abovearrow_forward
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