Question

Credit extended by suppliers with an intention to increase their sales. Answer in a word / phrase / term.

Answer 1

Continuation of an entity as a going concern is presumed as the basis for financial reporting unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements are prepared under the liquidation basis of accounting (Financial Accounting Standards Board, 2014[1]).
A going concern is a business that functions without the threat of liquidation for the foreseeable future, usually regarded as at least within 12 months. It implies for the business the basic declaration of intention to keep running its activities at least for the next year, which is a basic assumption to prepare financial statements considering the conceptual framework of the IFRS. Hence, the declaration of going concern means that the entity has neither the intention nor the need to liquidate or curtail materially the scale of its operations.

Answer 2

Credit extended by suppliers with an intention to increase their sales is known as Trade Credit.

Explanation:

• Trade credit is defined as a B2) agreement where a customer can purchase goods without paying cash up front but had to pay the supplier at a later time interval.
• This is usually done to increase the sale and maximize the profit.