Question

15. Interest paid on Vendor is divided into:
A. Depending on the time
B. In proportion to the sales
C. Previous establishment
D. Post-Meeting /incorporation​

Answer 1

in proportion to the sales

Answer 2

Interest paid on Vendor is divided into A) Depending on the time.

What is interest paid to the vendor?

Interest is paid to the vendor from the date of purchase of business till the purchase consideration is paid to the vendor, it is the interest on the amount that is still due with the purchasing company.

What is Pre and Post-incorporation period:

• It is the time gap between the purchase of a business and incorporation of the business, when the time gap occurs between the two, generally, these periods get formed.

• And the expenses and incomes are distributed between both these periods according to the time ratio, sales ratio, number of employees, etc.

Thus, the interest paid to the vendor will be divided on the basis of the adjusted time ratio in the pre and post-incorporation period.