If a Firm Switched from Taking Trade Credit Discounts to Paying

question 82

True/False

If a firm switched from taking trade credit discounts to paying on the net due date, this might cost the firm some money, but such a policy would probably have only a negligible effect on the income statement and no effect whatever on the balance sheet.

---

Definitions:

Accounts Receivable

Outstanding payments from customers to a firm for goods or services that have already been received or utilized but have not yet been settled.

Income Taxes Payable

A liability on a company's balance sheet representing the amount of taxes owed to governmental authorities that have not yet been paid.

Net Income

The total profit of a company after subtracting all expenses, including taxes, from its total revenues.

IFRS Categories

Classifications under the International Financial Reporting Standards that dictate the presentation and disclosure of financial information in the financial statements.