Tidewater Distributors Has an Arrangement with Its Bank in Which

question 50

Multiple Choice

Tidewater Distributors has an arrangement with its bank in which it has access to a fixed amount of funds to use as needed, and the company has to make monthly payments along with interest based on the outstanding amount of the loan. What type of financing does Tidewater Distributors use?

• A) commercial paper
• B) line of credit
• C) factoring
• D) trade credit

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Definitions:

Current Assets

Assets that a company expects to convert to cash or use up within one year.

Balance Sheet

A financial statement that reports the assets, liabilities, and owner’s equity at a specific date.

Finished Goods Inventory

Inventory consisting of products that have been completed but not yet sold to customers.

Cost Of Goods Manufactured

The total production cost incurred by a company to produce goods in a specific period, including labor, material, and overhead costs.