Which Statement Concerning the Average Settlement Period for Accounts Payable

question 18

Multiple Choice

Which statement concerning the average settlement period for accounts payable is correct?

• A)It is always best for the business to make creditors wait for their money for as long as possible.
• B)It is best to pay accounts payable as quickly as possible.
• C)Accounts payable provide a free source of finance for a business.
• D)A change in the accounts payable turnover period of 56 days to 65 days means that accounts payable are being paid faster.

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Definitions:

Creditor's Name

The name of the individual or entity that is owed money by a debtor for provided goods, services, or loans.

Voucher Number

A unique identifier assigned to a voucher, which is a document authorizing a payment or receipt in the accounting system.

Internal Control

Processes and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Separation Of Duties

is a preventive security measure in organizations to reduce the risk of fraud or error, requiring more than one person to complete key tasks.