AVERAGE PAYMENT PERIOD Definition

AVERAGE PAYMENT PERIOD (APP) is the number of days an entity takes to pay off credit purchases. As the average payment period increases, cash should increase as well, but working capital will remain the same. Formula: accounts payable / (total annual purchases / 360).

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BALANCE is: a. equality between the totals of the credit and debit sides of an account; or, b. the difference between the totals of the credit and debit sides of an account.

BOOKS OF ACCOUNT are the financial records of a business. Usually refers to the lowest level of recorded data, before summaries are made.

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