A Level Accounting (9706)•9706/12/M/J/23
Explanation
Trade Payables Days Formula Steps:
- Identify credit purchases: 80% of total purchases = 0.8 × 800 = 640.
- Note trade payables (owing to suppliers) = 48.
- Apply formula: (trade payables ÷ credit purchases) × 365 = (48 ÷ 640) × 365 ≈ 27.4 days.
- Select closest option: 28 days.
Why B is correct:
- Trade payables days measures payment period to suppliers using (payables ÷ credit purchases) × 365, equaling ~28 days here.
Why the others are wrong:
- A: Incorrectly uses total purchases (48 ÷ 800 × 365 ≈ 22 days), ignoring credit terms.
- C: Overstates by ~7 days, possibly misapplying receivables data or percentage.
- D: Grossly overstates, likely from inverting formula or using unrelated figure like revenue.
Final answer: B
Topic: Analysis and communication of accounting information
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