College Accounting 2nd Edition by David Haddock, John Price,Michael Farina

Exercise 11

Suppose you are the new controller of a small but growing company and you find that the firm has a policy of paying cash for all purchases of goods even though it could obtain credit. The president of the company does not like the idea of having debts, but the vice president thinks this is a poor business policy that will hurt the firm in the future. The president has asked your opinion. Would you agree with the president or the vice president? Why?