Credit Purchases Rs9 60 000 Cash Purchases Rs6 40 000 Creditors Rs2 40 000 Bills Payable Rs80 000 Av...........

Credit Purchases Rs9,60,000; Cash Purchases Rs6,40,000; Creditors Rs2,40,000; Bills Payable Rs80,000. Average Payment Period will be :

3 months

4 months

2.4 months

6 months

- Average Payment Period measures the time taken to pay off creditors.

- Credit Purchases: Rs 9,60,000

- Cash Purchases: Rs 6,40,000 (not used in calculation)

- Creditors: Rs 2,40,000

- Bills Payable: Rs 80,000

- Average Payment Period= (Creditors + Bills Payable)X12 / Credit Purchases= (2,40,000+ 80,000) X 12 /9,60,000 = 4 months

Submit Error