You Have Received an Email from a New Accounting Client,Jamal

question 113

Essay

You have received an email from a new accounting client,Jamal Parker,who has just started a new business.Jamal would like you to explain whether it is really that beneficial for him to take advantage of a 2/10,net 30 discount offered by one of his suppliers,given his limited cash flow.In a memo,explain to him why this is or is not a sound financial move for his new company.Most firms attempt to pay their accounts payable within the discount period to take advantage of the discount.Why is that normally a sound financial move?

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