A Level Accounting (9706)•9706/12/O/N/21
Explanation
Trade Payables Turnover Period Steps:
- Identify credit purchases as 18400 and average trade payables as 3950 (using given figure).
- Compute turnover ratio: 18400 ÷ 3950 ≈ 4.66 times.
- Calculate days: 365 ÷ 4.66 ≈ 79 days. Why C is correct:
- Matches formula: (365 × average payables) ÷ credit purchases = (365 × 3950) ÷ 18400 ≈ 79 days. Why the others are wrong:
- A: Underestimates by using sales (230800) instead of purchases, yielding ~6 days ratio.
- B: Possible miscalculation of ratio as 5 times, giving 73 days.
- D: Overestimates with 360-day year or rounded ratio of 4.2, yielding ~86 days.
Final answer: C
Topic: Analysis and communication of accounting information
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