When Customers of an Equipment Manufacturing Unit Buy Equipment on Credit

question 42

Multiple Choice

When customers of an equipment manufacturing unit buy equipment on credit and then delay making payments, they receive a bill from a collection agency. What relationship does the collection agency have with the manufacturer?

• A)Trade credit
• B)Revolving credit agreement
• C)Factoring
• D)Short-term bank loans

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Definitions:

Price Weighted Index

A stock market index in which each company's stock influences the index in proportion to its price per share.

Adjustable Rate Mortgage

A type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan according to market conditions.

Fixed Rate Mortgage

A mortgage in which the interest rate remains constant throughout the term of the loan.

Interest Rate

is the cost of borrowing money or the return on investment in a savings account, usually expressed as a percentage of the principal over a period of one year.