poa wa1

define trade payable

It refers to amount owed to credit suppliers when business bought goods or non-current assets on credit.

what is trade discount

it is a reduction to list price

what is cash discount

it is reduction to the net invoice price

2 purposes to give trade discount to customers

encourage bulk purchases

reward customers loyalty

2 purposes to give cash discount to customers

encourage early payment

cut down risk of uncollectible debt

State two reasons why customers might return goods to suppliers.

Goods delivered are damaged / faulty

Goods delivered are not according to description

Late delivery of goods

Definition of trade receivables

it refer to amounts owed by credit customers when business sold goods or provided services on credit.

state reasons why cheque is dishonoured

cheque is expired

cheque is postdated

insufficient money in bank

state accounting theory for allowance for impairment or trade payable

prudence theory

states that business should not overstate assets and profits nor understate liabilities and losses.

state theory for impairment loss on trade payable

matching theory

1. Matching theory states that expenses incurred must be matched against income earned in the same period to determine the profit for that period.