A Firm That Holds Cash to Avoid Penalties Associated with the Late

question 19

Multiple Choice

A firm that holds cash to avoid penalties associated with the late payment of bills is demonstrating which type of demand for money?

• A)transactions demand
• B)precautionary demand
• C)speculative demand
• D)present value demand
• E)risk-return demand

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Definitions:

Investing

The process of distributing funds, typically financial, in anticipation of earning revenue or gains.

Accounting Perspective

A viewpoint characterizing how accounting principles and practices are applied to record, summarize, and interpret financial information.

Accounting Equation

The foundational formula in accounting that represents the relationship between a company's assets, liabilities, and equity: Assets = Liabilities + Equity.

Accounting Equation

The foundational equation in accounting, Assets = Liabilities + Owner’s Equity, ensuring balance in financial reporting.