C-Plus Software Corporation Needs Money to Meet Its Payroll

question 42

Multiple Choice

C-Plus Software Corporation needs money to meet its payroll.Drake,president and owner of C-Plus,asks East Main Bank to loan C-Plus the funds.East Main insists that Drake sign the loan applica?tion,making himself personally liable for payment whether or not C-Plus defaults.If Drake signs the application,he will be

• A)a debtor in possession.
• B)a preferred creditor.
• C)a surety.
• D)a trustee.

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Definitions:

Acquisition of Inventory

The process of obtaining goods or materials for sale or use, either through purchase or production.

Purchases Account

A general ledger account in which the purchases of goods intended for resale are recorded.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting operating expenses, interest, and taxes.

Overall Profitability

An assessment of a company's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time.