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:

Total Cash Collected

The sum of all cash received by a company during a specified period, including sales, accounts receivable collections, and other cash receipts.

Collections

The process of recovering the amounts owed to a business by its debtors or the action of receiving payments.

Accounts Receivable Balance

The total amount of money owed to a company by its customers for goods or services delivered or used but not yet paid for.

Raw Materials Inventory

Stocks of unprocessed goods or materials held by a company to be used in production.