If a Company Can Stretch Its Accounts Payable Without Damaging

question 56

Multiple Choice

If a company can stretch its accounts payable without damaging its credit rating, it is effectively ___________ the cost of foregoing the cash discount.

• A) increasing
• B) reducing
• C) not affecting
• D) not able to determine.

---

Definitions:

Medicare

A federal health insurance program in the United States for people aged 65 and over, or for those under 65 with certain disabilities or conditions.

Federal Income Tax

The charge imposed by the IRS on the yearly income of individuals, corporations, trusts, and various legal bodies.

Discounted Note

A promissory note sold for less than its face value that will be worth its full value upon maturity.

Interest Calculations

The process of determining the interest amount payable or receivable over a certain period based on the principal sum and the rate of interest.