Which of the Following Would Not Be Considered a Carrying

question 3

Multiple Choice

Which of the following would not be considered a carrying cost of credit?

• A) Suzie buys $200 of goods on credit but never pays her bill.
• B) It requires 5 hours a week, to review potential new suppliers.
• C) It costs $500 a week to employ Jack to call customers concerning their late payments.
• D) Maxwell, Inc. requires an annual rate of return of 12% on its receivables.
• E) It requires 5 hours a week, at an annual salary of $50,000, for the manager to approve credit applications.

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Definitions:

Negotiable Instrument

A written promise certifying the payment of a certain sum of money, either upon request or at a predetermined date, with the document specifying the individual responsible for payment.

Value

Under the Code (except for negotiable instruments and bank collections), generally any consideration sufficient to support a simple contract.

Qualified Indorsement

An endorsement on a negotiable instrument that limits the liability of the endorser or specifies particular conditions for the endorsement's validity.

Liability

A legal responsibility or obligation, often involving financial compensation, that arises from actions or agreements.