Over the course of an accounting period, the amount owed by a firm to its creditors decreased by £20,000.
During the period, the firm’s purchases totalled £950,000, of which 80% were on credit. The firm did not receive any discount from its suppliers during the period.
On the basis of the information, the amount which the firm paid to its creditors during the period was?
Select ONE answer:
- £740,000
- £760,000
- £780,000
- £930,000
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 3
- Not correct
- Not correct
- Correct – Credit purchases – £950,000 @ 80% = £760,000. Assume that creditors owed £20,000 at the beginning of the year and did not owe anything at the end of the year (a reduction of £20,000 over the course of the period).
- Not Correct
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