How Did the "Cash and Carry" Policy Work

question 25

Multiple Choice

How did the "Cash and Carry" Policy work?

• A) It prohibited Americans during the Great Depression from buying on credit.
• B) It required nations at war in 1939 and 1940 to pay for U.S. goods in cash and to carry them in their own ships.
• C) It forced the American government to pay cash for all purchases and to carry them in its own ships.
• D) It eliminated capitalism by destroying the credit system.
• E) It insisted that nations wanting to trade with the United States would have to buy the goods on credit.

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Definitions:

Sale of Equipment

This transaction involves disposing of business equipment, typically recorded as a gain or loss in the financial statements, depending on the sale price versus book value.

Common Stock

A type of equity ownership in a corporation, with voting rights and potential dividends, that takes last priority in asset distribution upon liquidation.

Purchase of Equipment

The act of acquiring equipment for business operations, typically considered a capital expenditure.

Comparative Balance Sheet

Financial statements that display a company’s financial position at different points in time, side by side, to facilitate comparison.