Which of the Following Is the Best Definition of Accounts

question 93

Multiple Choice

Which of the following is the best definition of accounts receivable financing?

• A) The time between receipt of inventory and payment for it.
• B) A secured short-term loan that involves either the assignment or factoring of receivables
• C) The time between sale of inventory and collection of the receivable.
• D) Costs that rise with increases in the level of investment in current assets.
• E) A forecast of cash receipts and disbursements for the next planning period.

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Definitions:

Variable Cost

consists of costs that vary with the level of output, such as materials and labor costs, different from fixed costs.

NPV

Net Present Value; a financial metric used to assess the profitability of an investment by calculating the difference between the present value of cash inflows and outflows associated with the investment.

Default Chance

The probability that a borrower will fail to meet the obligations of a loan or debt.

Monthly Interest Rate

The percentage of a sum of money charged for its use per month, often used in reference to loans or credit balances.