Day: January 19, 2023

The following data is available for Alex plc:

Credit sales — > This Year £60,000  & Last Year £50,000

Credit purchases — > This Year £40,000  & Last Year £28,000

Trade receivables (average) — > This Year £12,000  & Last Year £8,000

Trade payables (average) — > This Year £10,000  & Last Year £16,000

Which statement is correct?

Select ONE answer:

1. Trade receivables and trade payables days ratios have improved.
2. Trade receivables and trade payables days ratios have worsened.
3. Trade receivables are paying faster, but trade payables are being paid more slowly.
4. Trade receivables are paying more slowly, but trade payables are being paid faster.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

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