Ralph Owns a Lumber Yard and Has a $500,000 Purchase

question 28

Multiple Choice

Ralph owns a lumber yard and has a $500,000 purchase order from a construction company. His cost of goods sold for this order is $300,000. Because his company needs working capital, the most logical loan for the lumber yard would be to use

• A) an equipment-based loan.
• B) factoring.
• C) purchase-order financing.
• D) asset-based financing.

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Definitions:

Bystander Apathy

A social phenomenon in which individuals are less likely to help a victim when other people are present, often due to diffusion of responsibility or fear of intervention.

Big Cities

Urban areas that are notably large in size, population, and often significance within a country or region.

Small Communities

Social units with relatively small populations, often characterized by close-knit relationships and shared values.

Corporations

Are legal entities that can enter into contracts and own property. They are taxed at a lower rate than individuals are and their owners are normally not liable for the corporation’s debt or any harm it may cause the public.