CUET UG 2025 — Accountancy Financial Statements

Average Payment Period measures the time taken by a business to pay its creditors and is calculated using the formula:

Average Payment Period = $\frac{\text{Trade Payables}}{\text{Credit Purchases}} \times 365$Credit PurchasesTrade Payables​×365 days

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Trade Payables include both Creditors and Bills Payable:

Trade Payables = Creditors + Bills Payable
Trade Payables = Rs. 90,000 + Rs. 52,000 = Rs. 1,42,000

Assuming all purchases are credit purchases (as no cash purchases are mentioned):

Credit Purchases = Rs. 4,20,000

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Applying the formula:

Average Payment Period = $\frac{1,42,000}{4,20,000} \times 365$4,20,0001,42,000​×365

Average Payment Period = 0.338 × 365

Average Payment Period = 123.4 days

Rounding off to the nearest value = 123 days

The correct answer is Option 3: 123 days.