Metro Office Supplies sells printers to business customers and offers several payment methods. Business buyerBankMetro Office© EAGLE BEACON GLOBAL (a) Descr...
Question 1 Report
Metro Office Supplies sells printers to business customers and offers several payment methods.
(a) Describe what is meant by a bank transfer. [2]
(b) Describe what is meant by a cheque. [2]
(c) Explain why a business buyer may use a bank transfer for a printer order. [2]
(d) Explain why Metro Office may wait for a cheque to clear before releasing goods. [2]
(e) Outline three payment methods that Metro Office could accept. [3]
(f) Explain three features of payment by credit card. [3]
(g) Account for why a supplier may offer credit terms to a business customer. [3]
(h) Explain three problems caused by late payment from business customers. [3]
Answer Details
(a) A bank transfer is an electronic movement of money from one bank account to another, authorised by the payer. [2]
(b) A cheque is a written instruction from an account holder to their bank to pay a stated amount; the recipient pays it into a bank account. [2]
(c) A business buyer may use bank transfer because it can send a large amount electronically and creates a bank record of payment. [2]
(d) Metro Office may wait because a cheque can be refused if the buyer has insufficient funds. Waiting for clearance reduces the risk of releasing goods without receiving payment. [2]
(e) Metro Office could accept bank transfer, cheque, and credit or debit card. [3]
(f) With a credit card, the card provider pays the seller; the customer repays the card provider later; and interest may be charged if the balance is not paid by its due date. [3]
(g) A supplier may offer credit terms to encourage orders, because buyers may need goods before receiving their own sales income, and to build an ongoing trading relationship. [3]
(h) Late payment can leave Metro short of cash for wages or suppliers, force it to borrow, and use time and money chasing the debt. [3]
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