Your Key Supplier Has Decided to Change the Terms of Your

question 129

Multiple Choice

Your key supplier has decided to change the terms of your credit arrangement from net 45 to net 30. This action will _____ your accounts payable period and _____ your cash cycle.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease
• E) decrease; not change

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Definitions:

Producer Surplus

Producer surplus is an economic measure of the difference between the amount a producer is paid for a good compared to the minimum amount they would accept to produce that good.

Market Price

is the current price at which an asset or service can be bought or sold in the open market.

Marginal Cost

The elevation in aggregate expenditure triggered by the output of one supplementary unit of a good or service.

Profit

The financial gain obtained when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.