The Financial System

question 69

Multiple Choice

The financial system

• A)coordinates the flow of funds from lenders to borrowers.
• B)creates new liquidity for the economy.
• C) both a and b.
• D)
• None of the above.

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Definitions:

Credit Period

The amount of time the buyer is allowed in which to pay the seller.

Credit Memo

A document issued by a seller to a buyer, reducing the amount the buyer owes to the seller under previous invoices.

Percent Of Cash Discount

The percentage reduction in price offered for prompt payment of invoices to encourage early settlement of accounts payable.

Normal Credit Balance

The expected or usual balance of a specific account, where liability, equity, and revenue accounts typically have credit balances.