WAEC Accounting Past Questions & Answers - Page 306

A trade discount represents the reduction in cost of goods or services sold in the business environment. Trade discounts can help small businesses save money when purchasing goods or services from suppliers. Many suppliers require small businesses to pay within a specific time frame to receive the trade discount.

One of the main reasons why firms offer trade discounts is to encourage debtors to clear their outstanding balances quickly.

No explanation has been provided for this answer.

The purpose of the profit and loss account is to: Show whether a business has made a PROFIT or LOSS over a financial year. It describe how the profit or loss arose – e.g. categorizing costs between “cost of sales” and operating costs.

A balance sheet is a financial statement that reports a company's assets, liabilities and shareholders' equity at a specific point in time, and provides a basis for computing rates of return and evaluating its capital structure.

The net working capital formula is calculated by subtracting the current liabilities from the current assets. Here is what the basic equation looks like. Typical current assets that are included in the networking capital calculation are cash, accounts receivable, inventory, and short-term investments. current assets - current liabilities = working capital