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ehidna [41]
3 years ago
12

What are similarity and difference between delayed payment and trade credit?

Business
2 answers:
LekaFEV [45]3 years ago
4 0

Answer:

Delayed Payment means a purchase by a buyer in which title to the grain passes to the buyer at a determined price and payment to the seller is not made in less than twenty-one (21) days after delivery.

dedylja [7]3 years ago
3 0

Answer:

Trade credit is a business-to-business (B2B) agreement in which a customer can purchase goods without paying cash up front, and paying the supplier at a later scheduled date. Usually, businesses that operate with trade credits will give buyers 30, 60, or 90 days to pay, with the transaction recorded through an invoice.

Trade credit can be thought of as a type of 0% financing, increasing a company’s assets while deferring payment for a specified value of goods or services to some time in the future and requiring no interest to be paid in relation to the repayment period.

KEY TAKEAWAYS

Trade credit is a type of commercial financing in which a customer is allowed to purchase goods or services and pay the supplier at a later scheduled date.

Trade credit can be a good way for businesses to free up cash flow and finance short-term growth.

Trade credit can create complexity for financial accounting depending on the accounting method used.

Trade credit financing is usually encouraged globally by regulators and can create opportunities for new financial technology solutions.

Suppliers are usually at a disadvantage with a trade credit as they have sold goods but not received payment.

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1:31

Trade Credit

Understanding Trade Credit

Trade credit is an advantage for a buyer. In some cases, certain buyers may be able to negotiate longer trade credit repayment terms, which provides an even greater advantage. Often, sellers will have specific criteria for qualifying for trade credit.

A B2B trade credit can help a business to obtain, manufacture, and sell goods before ever having to pay for them. This allows businesses to receive a revenue stream that can retroactively cover costs of goods sold. Walmart is one of the biggest utilizers of trade credit, seeking to pay retroactively for inventory sold in their stores. International business deals also involve trade credit terms. In general, if trade credit is offered to a buyer it typically always provides an advantage for a company’s cash flow.

The number of days for which a credit is given is determined by the company allowing the credit and is agreed upon by both the company allowing the credit and the company receiving it. Trade credit can also be an essential way for businesses to finance short-term growth. Because trade credit is a form of credit with no interest, it can often be used to encourage sales.

Since trade credit puts suppliers at somewhat of a disadvantage, many suppliers use discounts when trade credits are involved to encourage early payments. A supplier may give a discount if a customer pays within a certain number of days before the due date. For example, a 2% discount if payment is received within 10 days of issuing a 30-day credit. This discount would be referred to as 2%/10 net 30 or simply just 2/10 net 30.

Trade Credit Accounting

Trade credits are accounted for by both sellers and buyers. Accounting with trade credits can differ based on whether a company uses cash accounting or accrual accounting. Accrual accounting is required for all public companies. With accrual accounting, a company must recognize revenues and expenses at the time they are transacted.

Trade credit invoicing can make accrual accounting more complex. If a public company offers trade credits it must book the revenue and expenses associated with the sale at the time of the transaction. When trade credit invoicing is involved, companies do not immediately receive cash assets to cover expenses. Therefore, companies must account for the assets as accounts receivable on their balance sheet.

With trade credit, there is the possibility of default. Companies offering trade credits also usually offer discounts, which means they can receive less than the accounts receivable balance. Both defaults and discounts can require the need for accounts receivable write-offs from defaults or write-downs from discounts. These are considered liabilities a company must expense.

Alternatively, trade credit is a useful option for businesses on the buying side. A company can obtain assets but would not need to credit cash or recognize any expenses immediately. In this way, trade credit can act like a 0% loan on the balance sheet.

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At Haddon, Inc., the office workers are employed for a 40-hour workweek and are paid on either an annual, monthly, or hourly bas
levacccp [35]

Answer:

Employee        Salary          Hrs. Worked        Cumulative Taxable

                                                                         Wages as of Last Pay Period

King, M.      $135,200 (year)     40                  $132,600.00

Manera, E.     $6,500 (month)  40                  $76,500.00

Tate, S.          $3,900 (month)  48                  $45,900.00

Yee, L.            $12.50 (hour)     44.5               $27,675.13

Diaz, R.           $12.50 (hour)     48                  $14,778.96

Zagst, J.          $14.50 (hour)     52                  $24,703.02

(a) regular earnings,  

King, M. $135,200 / 52 weeks = $2,600    

Manera, E. $1,500 weekly salary    

Tate, S. $900      

Yee, L. $12.50 x 40 = $500        

Diaz, R. $12.50 x 40 = $500        

Zagst, J. $14.50 x 40 = $580

(b) overtime earnings,

King, M. $0    

Manera, E. $0  

Tate, S. [($900 / 40) x 8 x 1.5] = $270      

Yee, L. $12.50 x 4.5 x 1.5 = $84.38        

Diaz, R. $12.50 x 8 x 1.5 = $150                  

Zagst, J. $14.50 x 12 x 1.5 = $261

(c) total regular and overtime earnings,

King, M. $2,600    

Manera, E. $1,500  

Tate, S. $1,170      

Yee, L. $584.38        

Diaz, R. $650                  

Zagst, J. $841

(d) FICA taxable wages (the FICA taxes limit for 2020 is $137,700, so everyone will be taxed)

King, M. $2,600    

Manera, E. $1,500  

Tate, S. $1,170      

Yee, L. $584.38        

Diaz, R. $650                  

Zagst, J. $841

(e) FICA taxes to be withheld

King, M. $2,600 x 7.65% = $198.90    

Manera, E. $1,500 x 7.65% = $114.75      

Tate, S. $1,170 x 7.65% = $89.51          

Yee, L. $584.38 x 7.65% = $44.71            

Diaz, R. $650 x 7.65% = $49.73                      

Zagst, J. $841 x 7.65% = $64.34    

(f) net pay for the week ended

King, M. $2,600 - $198.90 = $2,401.10    

Manera, E. $1,500 - $114.75 = $1,385.25      

Tate, S. $1,170 - $89.51 = $1,080.49          

Yee, L. $584.38 - $44.71 = $539.67            

Diaz, R. $650 - $49.73 = $600.27                      

Zagst, J. $841 - $64.34 = $776.66    

3 0
3 years ago
According to the article, what should you do if you suspect your boss of unethical business practices?
Aleksandr-060686 [28]

Answer:

Report it to the right person

Explanation:

According to the article titled "What to do when you spot your employer doing something illegal" written by Catherine Conlan.

It says the best thing to do is to report it to the right person.

This is evident when it is stated in the article that "If you reasonably believe your employer is doing something illegal or unethical, you should first bring it to your supervisor’s attention... If it’s your supervisor you suspect, exhaust the chain of command within the company.

Hopefully, the company will investigate the matter. If no one within the chain of command responds, then there is generally a government agency with whom one can file a complaint,"

8 0
3 years ago
The following data is available for BOX Corporation at December 31, 2017: Common stock, par $10 (authorized 30,000 shares) $270,
Snezhnost [94]

Answer:

26,920

Explanation:

At $10 par value,

Number of authorized shares = 30,000 (given)

Number of issued shares = $270,000/$10 = 27,000 shares

Number of treasury shares = $1,200/$15 = 80 shares

Since Treasury shares do not form part of outstanding shares, they will be deducted from issued shares to obtain outstanding shares

Therefore, number of outstanding shares

= 27,000 - 80

= 26,920 shares

5 0
3 years ago
Select the incorrect statement regarding postaudits of capital investment decisions. Multiple Choice A postaudit should be condu
Finger [1]

Answer:

A post audit is only necessary for a capital investement selected using a technique that does not consider the time value of money

Explanation:

A post audit defines the analysis of an outcome with respect to the capital budgeting investment. It is to be conducted at the closing of the period. Also it measures whether the project should be accepted or rejected via details assumption analysis but also it considered the times value of the money

Therefore the above statement should be considered

And, hence, the other options should be considered as wrong

4 0
3 years ago
A court adjudicates Huck mentally incompetent and appoints Inez to be his guardian. Later, without Inez's knowledge, Huck signs
nalin [4]

Answer:

the contract is a. void.

Explanation:

this is because Huck has been declared as mentally incompetent by the court and that can only be changed by the court as well. so, when he agrees to sell and create a contract, it becomes void, no matter the value is or how closely it relates to the market value.

if it was Inez who came into the contract, then the contract would have been legally binding.

8 0
3 years ago
Read 2 more answers
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