Which of the Following Is a Characteristic of Commercial Paper

question 45

Multiple Choice

Which of the following is a characteristic of commercial paper dealers?

• A) provide greater convenience for their clients than bank borrowing but at rates somewhat higher than bank rates
• B) set rates at the beginning of the month
• C) recall notes that have been placed with investors if rates change dramatically
• D) none of the above is a characteristic of commercial paper dealers

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Definitions:

Allowance Method

An accounting technique used to account for bad debts, where an estimated amount is deducted from accounts receivable to reflect possible non-collection.

Bad Debts

are amounts owed to a company that are considered uncollectible, leading to a financial loss.

Percentage of Sales

A financial analysis tool used to forecast future expenses, based on a fixed percentage of the total sales.

Allowance for Doubtful Accounts

A contra asset account on a company's balance sheet that estimates the amount of receivables that may not be collected.