"what If" Scenario Flashcards
1
Q
What is a trade creditor?
A
Someone who you OWE MONEY TO.
Supplier gives John the pipes but gives him twenty days to pay them for it. If they increase the amount of days he has to pay, he has a higher “trade credit” balance and bank balance on the balance sheet. Worse relationship with suppliers. Suppliers may seek price increase.
Think suppliers who give you supplies and you owe them money for it.
Keep in mind this is a cell on a BALANCE SHEET spreadsheet.
2
Q
What is a trade debtor?
A
This is a customer or group who OWES YOU MONEY!
John has done a job and is owed money by Astley ainslie.
His trade debtor balance increases on the balance sheet. Better customer relations. Higher overdraft, lower bank balance. Higher risk of bad debts.
