Trade Credit Involves

question 76

Multiple Choice

Trade credit involves:

• A) no explicit obligation or expectation, on the part of the investors, to be repaid their investment.
• B) purchasing supplies or equipment through financing made available by vendors.
• C) pledging some assets-such as a home, real estate, machinery, and plant-as collateral.
• D) guaranteeing a portion of the loan to partners that include private lenders, microlending institutions, and community development organizations.
• E) business plan competitions hosted by colleges and universities or small business associations.

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Definitions:

Activity Changes

Adjustments or variations in the level of a company's activities, such as production volume or sales, that can impact its costs and operational efficiency.

Straight-Line Depreciation

A method for distributing the cost of a solid asset in even annual payments throughout its effective life.

Insurance Premiums

The amount of money that an individual or business must pay for an insurance policy.

Direct Materials Cost

The expense associated with the raw materials directly used in the production of a product.