Which of the Following Liabilities Is Often Referred to as "Free

question 23

Multiple Choice

Which of the following liabilities is often referred to as "free debt" because it rarely carries any interest if paid within a specified period of time?

• A)line of credit
• B)working capital loan
• C)accounts payable
• D)None of the above-all current liabilities carry an interest rate.

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Definitions:

Credit Sales

refer to sales where the customer is allowed to pay at a later date, either in a single payment or in installments.

COGS

The direct costs that are attributable to the production of the goods sold in a company, including both materials and labor costs.

Cash Cycle

The period of time it takes for a company to turn its inventory into cash flows from sales, encompassing the time frames of purchasing inventory, selling products, and collecting revenue from customers.