• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

wqz co % cost of early settlement discounts

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › wqz co % cost of early settlement discounts

  • This topic has 5 replies, 2 voices, and was last updated 8 months ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • May 18, 2022 at 12:02 pm #655953
    AFNAAAN
    Member
    • Topics: 16
    • Replies: 12
    • ☆

    question wqz co from kaplan kit

    why didnt they annualise the discount while calculating percentage cost of early settlement discount?
    we are supposed to annualise the discount wen calculating it ryt sir??cuz discounts are not annual rate whereas interest from short term finance is annual rate

    May 18, 2022 at 7:53 pm #655987
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51555
    • ☆☆☆☆☆

    I do not have the Kaplan Kit – only the BPP Revision Kit.

    If it is marked as being a past exam question, then tell me the date of the exam. Otherwise I am afraid that I cannot help you given that I do not have the Kaplan Kit.

    May 19, 2022 at 4:25 am #656005
    AFNAAAN
    Member
    • Topics: 16
    • Replies: 12
    • ☆

    its in past exam dec 10

    WQZ Co could introduce an early settlement discount of 1% for customers who pay within
    30 days and at the same time, through improved operational procedures, maintain a
    maximum average payment period of 60 days for credit customers who do not take the
    discount. It is expected that 25% of credit customers will take the discount if it were
    offered.
    It is expected that administration and operating cost savings of $753,000 per year will be
    made after improving operational procedures and introducing the early settlement
    discount.
    Credit sales of WQZ Co are currently $87.6 million per year and trade receivables are
    currently $18 million. Credit sales are not expected to change as a result of the changes in
    receivables management. The company has a cost of short?term finance of 5.5% per year.

    required (c) Calculate and comment on whether the proposed changes in receivables
    management will be acceptable. Assuming that only 25% of customers take the
    early settlement discount, what is the maximum early settlement discount that
    could be offered?

    May 19, 2022 at 7:48 am #656011
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51555
    • ☆☆☆☆☆

    We only annualise the discount if the same discount is taken by all customers. Otherwise, as in this question, we look at the cost over the year of giving the discount and compare with the interest savings over the year.

    I do explain all this in my free lectures on the management of receivables.

    May 19, 2022 at 8:41 am #656013
    AFNAAAN
    Member
    • Topics: 16
    • Replies: 12
    • ☆

    okay! in simple words
    you are saying while calculating %cost of early settlement discounts we need to annualise the discount only if all the customers are taking the dicounts ??ryt??and v need not annualise the discount if everyone isnt taking the discount

    May 19, 2022 at 4:54 pm #656042
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51555
    • ☆☆☆☆☆

    Agreed (although have you actually watched the free lectures on this?).

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • Joanne94 on Statement of Cash Flows (part b) Example 1 – ACCA Financial Accounting (FA) lectures
  • Ken Garrett on Digital strategy – CIMA E3
  • arjunsanthosh on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)
  • cBarsoum on Audit Risk – ACCA Audit and Assurance (AA)
  • allistair.a@gmail.com on Digital strategy – CIMA E3

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy