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Hello Mr John,
Why when we are considering the decision to AR or AP for offering the discount or taking the discount from payables we always look to the overdraft interest as a cost but may be it will be the case that we pay from the bank current account .So why only the overdraft is in the concern.
why in this theory only we look to overdraft interest.
Thanks,
If they had plenty of cash then we would use the interest that they were receiving on their account (but the arithmetic would effectively be the case). However they are only likely to be prepared to offer a discount if they were short of cash and therefore want to reduce their overdraft.
Thanks a lot Sir,
But had it happened in any time in the exam that the calculation depend on the other interest rate other than the overdraft.
Thanks,
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