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    Question

    ABC Ltd has made purchases of Rs.100,000 during the

    year. The balance sheet shows an average accounts payable balance of Rs12,000. ABC Ltd payable payment period is closest to:
    A 37 days Correct Answer Incorrect Answer
    B 44 days Correct Answer Incorrect Answer
    C 52 days Correct Answer Incorrect Answer
    D 45 days Correct Answer Incorrect Answer
    E 25 days Correct Answer Incorrect Answer

    Solution

    ┬а ┬а ┬а ┬а ┬а ┬аPayables Turnover = Purchases/ average payables = 100000/12000 ┬а┬а┬а┬а┬а┬а┬а┬а┬а┬а┬а 8.33 ┬а┬а┬а┬а┬а┬а┬а┬а┬а┬а┬а Payables payment period = 365/8.33 = 43.8 ~ 44 days

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