How Are the Linked Accounts for CPP Different from the Linked

question 21

Multiple Choice

How are the linked accounts for CPP different from the linked accounts for income tax -

• A)CPP has a linked liability account only;income tax has an expense account only
• B)CPP has a linked expense account only;income tax has a liability account only
• C)CPP has both linked liability and expense accounts;income tax has a liability account only
• D)none of the above

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Definitions:

Working Capital Policy

A company's strategy concerning managing its current assets and liabilities to ensure it has sufficient liquidity to meet its short-term obligations.

Factoring Accounts Receivable

A financial transaction whereby a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.

Without Recourse

A financial term indicating that the seller of an asset is not liable if the underlying assets fail to perform as expected.

Maturity Factoring

A form of financing where a business sells its invoices to a factor at a discount for immediate cash, with the collection of funds from customers handled by the factor upon maturity.