Which of the Following Statements Is CORRECT

question 125

Multiple Choice

Which of the following statements is CORRECT?

• A) Accruals are an expensive but commonly used way to finance working capital.
• B) A conservative financing policy is one where the firm finances part of its fixed assets with short-term capital and all of its net working capital with short-term funds.
• C) If a company receives trade credit under terms of 2/10,net 30,this implies that the company has 10 days of free trade credit.
• D) One cannot tell if a firm has a conservative,aggressive,or moderate current asset financing policy without an examination of its cash budget.
• E) If a firm has a relatively aggressive current asset financing policy vis-à-vis other firms in its industry,then its current ratio will probably be relatively high.

Distinguish between tangible and intangible assets.

Identify the effects of asset acquisition and expenditure on financial statements.

Understand the financial implications of asset disposal and exchange.

Learn the impact of depreciation on financial statements and cash flow.

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Definitions:

Sense of Purpose

The feeling or belief that one has a meaningful direction in life or contributes to something greater than oneself.

Social Learning

A theory that proposes individuals can learn new behaviors or knowledge by observing and imitating others within a social context.

Albert Bandura

A psychologist renowned for his work on social cognitive theory, including the concept of self-efficacy and observational learning.

Transition Theory

A framework or model that explains how individuals navigate changes in their lives, addressing phases and coping mechanisms during transitions.