Trade credit, Managerial Accounting

It is a spontaneous source of finance that is commonly extended to business organization depending on the custom of the competition and trade prevailing within the organization and relations of the buyers and suppliers. This type of business credit is more admired as it contributes to regarding one-third of the total short-term credit. The addiction on such source of working capital finance is higher because of negligible cost of finance as comparison to negotiated finances.

This is a facility whereas business firms are permitted by the suppliers of raw materials, parts, elements and services, etc, to defer instantaneous payment to an exact future period. Trade credit is produced when a company needs supplies, materials or merchandise and doesn't pay for them instantly. If a buyer is capable to determine the credit without any legal instrument or evidence, this is called 'Open Account Trade Credit' and emerges in the Balance Sheet of the buyer as sundry creditors. While an instrument is specified, notably negotiable instrument, within acknowledgement of the debt, similar appears in the last statement as Bills or Notes payable.

Posted Date: 4/9/2013 3:03:38 AM | Location : United States







Related Discussions:- Trade credit, Assignment Help, Ask Question on Trade credit, Get Answer, Expert's Help, Trade credit Discussions

Write discussion on Trade credit
Your posts are moderated
Related Questions
International Transfer pricing International transfer pricing refers to the determination of prices to be charged between related persons and in particular within a multination

Dynamic programming It is an extension which finds solutions to problems involving a number of decisions which have to be made sequentially. For example, the amount of a produc

discuss which of the cost classification is suitable for LunchBreak LTD and why?

What is kaizen Kaizen is the Japanese term for continuous improvement. The kaizen concept was pioneered by in Japan by Toyota as daily challenge to all its to improve their pro



how to i get financial report for my company Anuz Wpp

Markov Analysis It is a way of analyzing the current movement of some system in an effort to predict the future movement of the same system. There are two elements that must be

JIT purchasing On the other hand is a purchasing system in which material purchased are contracted so as that the receipt and usage of materials to the maximum extent possible,

C-V-P ANALYSIS UNDER UNCERTAINTY A major limitation of the basic C.V.P analysis is the assumption that the unit variable cost, selling price and the fixed costs are constant an