Cash discount – NBC Institute

FA – May 2021 – L1 – SA – Q4 – Double-Entry Accounting Principles

Identify the correct statement regarding cash discount.

Question

Which of the following is CORRECT in respect of cash discount?
A. Discount allowed is a deduction from trade payables
B. Discount received is a deduction from sales
C. Discount columns in cash book form part of the double entry
D. The total amount of discount on the debit side of cash book is an income
E. The total amount of discount on the credit side of cash book is discount received

Answer

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Tags: Accounting principles, Cash discount, Double Entry
Level: Level 1

Topic: Double-Entry Accounting Principles
Series: MAY 2021

AFM – Nov 2017 – L3 – Q1b – Sources of finance and cost of capital

Analyzing financing alternatives for working capital of GH¢100,000 through bank loan, promissory notes, and cash discount.

Question

Abbot Ltd needs to increase its working capital by GH¢100,000. It has decided that there are essentially three alternatives of financing available. They are:

i) Borrow from a bank at 8%. This alternative would necessitate maintaining a 25% compensation balance.

ii) Issue promissory notes at 7.5%. The cost of placing the issue would be GH¢500 each six months.

iii) Forego cash discount, granted on the basis of 3/10, net 30.

The firm prefers the flexibility of bank financing, and has provided an additional cost of this flexibility to be 1%.

Required: Assess which alternative financing method should be selected.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bank Loan, Cash discount, Cost Analysis, Financing, Promissory notes, Working Capital
Level: Level 3

Topic: Sources of finance and cost of capital
Series: NOV 2017

FA – May 2021 – L1 – SA – Q4 – Double-Entry Accounting Principles

Identify the correct statement regarding cash discount.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting principles, Cash discount, Double Entry
Level: Level 1

Topic: Double-Entry Accounting Principles
Series: MAY 2021

AFM – Nov 2017 – L3 – Q1b – Sources of finance and cost of capital

Analyzing financing alternatives for working capital of GH¢100,000 through bank loan, promissory notes, and cash discount.

Question

Abbot Ltd needs to increase its working capital by GH¢100,000. It has decided that there are essentially three alternatives of financing available. They are:

i) Borrow from a bank at 8%. This alternative would necessitate maintaining a 25% compensation balance.

ii) Issue promissory notes at 7.5%. The cost of placing the issue would be GH¢500 each six months.

iii) Forego cash discount, granted on the basis of 3/10, net 30.

The firm prefers the flexibility of bank financing, and has provided an additional cost of this flexibility to be 1%.

Required: Assess which alternative financing method should be selected.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bank Loan, Cash discount, Cost Analysis, Financing, Promissory notes, Working Capital
Level: Level 3

Topic: Sources of finance and cost of capital
Series: NOV 2017

Question Tag: Cash discount

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FA – May 2021 – L1 – SA – Q4 – Double-Entry Accounting Principles

Identify the correct statement regarding cash discount.

AFM – Nov 2017 – L3 – Q1b – Sources of finance and cost of capital

Analyzing financing alternatives for working capital of GH¢100,000 through bank loan, promissory notes, and cash discount.

FA – May 2021 – L1 – SA – Q4 – Double-Entry Accounting Principles

Identify the correct statement regarding cash discount.

AFM – Nov 2017 – L3 – Q1b – Sources of finance and cost of capital

Analyzing financing alternatives for working capital of GH¢100,000 through bank loan, promissory notes, and cash discount.

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Question Tag: Cash discount

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FA – May 2021 – L1 – SA – Q4 – Double-Entry Accounting Principles

Identify the correct statement regarding cash discount.

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AFM – Nov 2017 – L3 – Q1b – Sources of finance and cost of capital

Analyzing financing alternatives for working capital of GH¢100,000 through bank loan, promissory notes, and cash discount.

You're reporting an error for "AFM – Nov 2017 – L3 – Q1b – Sources of finance and cost of capital"

FA – May 2021 – L1 – SA – Q4 – Double-Entry Accounting Principles

Identify the correct statement regarding cash discount.

You're reporting an error for "FA – May 2021 – L1 – SA – Q4 – Double-Entry Accounting Principles"

AFM – Nov 2017 – L3 – Q1b – Sources of finance and cost of capital

Analyzing financing alternatives for working capital of GH¢100,000 through bank loan, promissory notes, and cash discount.

You're reporting an error for "AFM – Nov 2017 – L3 – Q1b – Sources of finance and cost of capital"

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