A Firm Has an Average Accounts Payable Balance of $180,000

question 83

Multiple Choice

A firm has an average accounts payable balance of $180,000. Its average daily cost of goods sold is $12,000. What is the average number of days that the firm takes to pay its debt?

• A) 2 days
• B) 8 days
• C) 15 days
• D) 21 days

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Definitions:

Financial Position

A snapshot of what a company owns and owes at a specific point in time, encompassing assets, liabilities, and equity.

Promissory Note

A Promissory Note is a financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Simple Interest

Interest calculated only on the principal amount, not on previous interest earned.

Discounted

Refers to the reduction of an item's price or the present value calculations of future cash flows using a discount rate.