Which of the Following Statements Is Most Correct

question 45

Multiple Choice

Which of the following statements is most correct?

• A) Accruals are an expensive way to finance working capital.
• B) A conservative financing policy is one in which the firm finances all of its fixed assets with long-term capital and part of its permanent net operating working capital with short- term, nonspontaneous credit.
• C) If a company receives trade credit under terms 2/10, net 30, this implies the company has 10 days of free trade credit.
• D) Statements a and b are correct.

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Definitions:

Midnight Deadline Rule

A regulation requiring that certain types of contracts be physically delivered to the offeree by midnight of the next day after they are made to be effective.

Uncertified Check

is a check that has not been verified or guaranteed by the bank upon which it is drawn, making its acceptance based on the account holder's standing and available funds.

Six Months Old

Describes something, such as a product, document, or animal, that has existed or has been in use for six months.

Point-of-Sale Systems

Hardware and software systems used at retail and hospitality businesses to process sales transactions.