Concept Introduction:
Days Payable outstanding (DPO): Days payable outstanding is the time in days which the company takes to pay off its accounts payable. Day’s payable outstanding is calculated using the following formula:
Requirement-a:
The day's payables outstanding of Wenz Co. for year 1 and Year 2
Concept Introduction:
Days Payable outstanding (DPO): Days payable outstanding is the time in days which the company takes to pay off its accounts payable. Day’s payable outstanding is calculated using the following formula:
Requirement-b:
If company has negotiated better credit terms in year 2 as compared with year 1
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Fundamental Accounting Principles
- The Days Sales Outstanding is important in determining the no. of days the suppliers are willing to pay their liabilities to the company. Right O Wrongarrow_forwarda) Calculate Kopitiam Sdn Bud’s accounts receivable turnover ratio for Year 2 and Year 3. b) Calculate the number of days the average balance of receivables is outstanding before being converted into cash (turnover in days) for Year 2 and Year 3 c) What problem do you see with the company’s credit policy if the terms are net 30 days? Explain your answer.arrow_forward6. Your firm decides to tighten its credit policy so that customers pay in 30 days rather than 45 days. Assuming no other changes, this action will decrease the firm's: A Trade payables period. B Inventory holding period. C Trade receivables collection period. D None of above.arrow_forward
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- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College