Which One of the Following Statements Is Correct

question 68

Multiple Choice

Which one of the following statements is correct?

• A) A farmer generally uses a type of financing that employs trust receipts to provide financing during the growing season.
• B) A third-party inventory manager is generally involved with the lender and the borrower in a floor plan arrangement.
• C) A drug store is more apt to have a financing arrangement involving trust receipts than one involving a general security agreement.
• D) Floor plan arrangements are most applicable to large, easily identifiable types of inventory.
• E) A direct loan from a bank is generally less expensive than a loan involving commercial paper.

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Definitions:

Gross Profit

Income after deducting only the cost of goods sold from revenue, indicating the efficiency of a company's production process.

Manufactured Units

Items or products that have been produced or fabricated in a manufacturing process.

Sold Units

The quantity of product units sold within a specific time period.

Net Income

The total profit of a company after subtracting all expenses from revenue.