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In calculation of EARLY discount in receivables, sometimes they take sales and sometimes they take current trade receivables, how do we know which one to take?
ThanksThe cost of the discount over the year is a % of the total sales over the year.
For the calculation of the interest cost on the reduction in the average level of receivables, the examiner is not consistent in his answers as to whether or not to take the discount into accounts, and so you get full marks whether or not you account for it there.
I explain all of this in my free lectures on the management of receivables.
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