An Open Account Credit Occurs When a Firm Grants

question 23

Multiple Choice

An open account credit occurs when a firm grants:

• A)trade credit to customers who have an account with the firm.
• B)trade credit to customers who have depository accounts.
• C)trade credit to customers by collateralizing the assets sold to the customer.
• D)credit to customers who have an open bank account.

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance or values of the components in the data set.

Cost of Debt

The effective rate that a company pays on its current debt, which can be measured before or after taxes.

Yield-To-Maturity

The total return anticipated on a bond if it is held until the date it matures.

Total Assets

The sum of all current and long-term assets owned by a company, used to determine the financial strength of a business.