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Ask the Tutor ACCA FM

Nesud co (Sep 16)

VDVidhi Dhakan5y ago
Hi sir, I am not able to understand in part a) it says 4% overdraft than I get this number 125000*0.04= 5000 but they put this 5000 in cost. But I thought we should put this 5000 in savings why they put in cost Instead of saving?? Can you please explain me
John MoffatJohn MoffatTutor5y ago#1
If they pay early then the overdraft increases. That means that they pay more interest and that is a cost.
VDVidhi Dhakan5y ago#2
Oh so like opposite from recievables??
John MoffatJohn MoffatTutor5y ago#3
Yes :-)
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