Key Concepts
A business often has a choice of suppliers for the same goods or non-current asset. Before deciding which supplier to buy from, it weighs both accounting and non-accounting information.
| Type of information | Examples |
|---|---|
| Accounting |
|
| Non-accounting |
|
Accounting information can be expressed as a money amount and comes from the records (e.g. the price, the cash discount). Non-accounting information is not a money amount (e.g. the supplier's reputation, the length of the warranty).
The six non-accounting factors, in plain terms:
| Factor | Why it matters |
|---|---|
| Local or overseas supplier | An overseas supplier usually takes longer to deliver — the goods travel further and are checked at the border — so the business waits longer to receive them. |
| After-sales service | A supplier offering free installation or free maintenance for the first year lowers the business's later costs. |
| Return policy | If damaged goods can be returned, the business has greater assurance of product quality. |
| Online vs brick-and-mortar (a physical shop) supplier | Being able to visit the shop lets the business see and touch the goods before buying, to check they meet its needs. |
| Reputation of the supplier | A supplier with a good reputation — for example, one that has traded reliably for many years — is more likely to deliver good-quality goods and services on time. |
| Warranty | A promise to repair or replace a non-current asset within a stated period — protects the business against repair costs or breakdowns during that period. |
How to answer a "which supplier" question. This is a scenario-based question (SBQ) — the same format used in the "which inventory to buy" question earlier in the course. Use this two-step structure every time:
Step 1 — State your decision clearly.
Begin with a direct statement of which supplier the business should buy from.
"[Business] should buy from [Supplier]."
Note: There is no single "right" or "wrong" decision in an SBQ. Marks are earned in Step 2 — as long as the decision is supported with evidence and financial impact, either supplier can score full marks.
Step 2 — Support your decision with evidence from the question.
For each supporting point, give E + E:
- Evidence — the specific figure or fact from the scenario that matters — in your own words.
- Effect — explain why that evidence supports your decision in terms of financial impact (effect on cost, profit, or the smooth running of the business).
Number of supporting points required:
- G2: 2 pieces of evidence, each with explanation.
- G3: 3 pieces of evidence, each with explanation.
How marks are awarded: the decision statement earns 1 mark, and each supporting point is worth 2 marks — 1 mark for the evidence (the figure or fact) and 1 mark for the financial impact (its effect). So evidence given on its own still earns 1 mark — but the second mark is lost without the financial impact.
Step 1: State your decision. Say clearly which supplier to buy from.
Step 2: Support with evidence — pick out the relevant fact, then explain the financial impact (cost, profit, or smooth running of the business).
G2 = 2 points. G3 = 3 points. Decision = 1 mark; each point = 1 mark evidence + 1 mark impact.
| Copper & Crate (overseas) | Driftwood Supply Co (local) | |
|---|---|---|
| Price of furniture | $7,800 | $8,300 |
| Delivery | Delivery takes three weeks from the order date. | Delivery takes one week from the order date. |
| Credit terms | 30 days; 3% cash discount if paid within 7 days. | 15 days; 3% cash discount if paid within 7 days. |
| Warranty / after-sales service | • Three-year warranty on manufacturing defects • Free repairs during the warranty period • Repairs attended to within seven working days | • Two-year warranty on manufacturing defects • Free repairs during the warranty period • Repairs attended to within two working days |
| Reviews | • Very good reviews on the quality of workmanship • Furniture can only be viewed online | • Furniture can be viewed in person at the shop • Very good reviews on the quality of workmanship |
Required: Recommend which supplier Serena should buy from. Justify your decision with three reasons.
Acceptable Answer 1 — buy from Copper & Crate:
Decision: Serena should buy from Copper & Crate.
Copper & Crate's furniture is $500 cheaper ($7,800 against $8,300). This lower cost saves the business money that can be used for other operating needs.
Copper & Crate gives a longer credit term — 30 days against 15 days. The extra 15 days lets Serena hold on to her cash for longer to meet other needs, which is important for a small business like a café.
Copper & Crate offers a three-year warranty, one year longer than Driftwood Supply Co's two years. This saves the business possible repair costs in the third year. (G3: include this third point.)
Acceptable Answer 2 — buy from Driftwood Supply Co:
Decision: Serena should buy from Driftwood Supply Co.
Although Driftwood Supply Co is $500 more expensive, its furniture arrives two weeks earlier (one week against three weeks). Serena can open for business sooner and start earning revenue earlier.
Driftwood Supply Co attends to repairs faster — within two working days, against seven. This means less disruption to the café and so a smaller loss of revenue when furniture needs fixing.
Serena can inspect Driftwood Supply Co's furniture in person before buying, while Copper & Crate only allows online viewing. This gives her greater assurance that the furniture truly meets the café's needs. (G3: include this third point.)
Giving evidence without linking it to financial impact. "Copper & Crate is cheaper" earns only the evidence mark. Tie it to an effect: "…so the business saves money it can use for other operating needs."
Forgetting to state the decision first. Always open with a clear choice of supplier before presenting evidence — do not leave the decision implied.
Giving fewer points than required. G2: 2 points. G3: 3 points. Each point must be a separate piece of evidence, not the same idea reworded.