The Special Rules Providing for the Creation of Purchase Money

question 16

Multiple Choice

The special rules providing for the creation of purchase money security interests under provincial personal property security laws were put in place because if there were no such rules,

• A)the security interests of suppliers of goods would never have first priority in the goods supplied.
• B)where other secured parties already have security interests that extend to after-acquired property,a subsequent supplier of goods would not be entitled to first priority for its security interest in the goods supplied.
• C)suppliers of inventory would be unable to obtain a security interest in the inventory supplied.
• D)debtors would never be able to obtain inventory financing.
• E)a financial institution that financed the acquisition of goods by a debtor would never be able to get first priority for its security interest in the goods acquired.

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Definitions:

Predetermined Overhead Rate

A rate calculated before the period begins, used to allocate manufacturing overhead to products based on a specific activity base.

Volume Variance

The difference between planned production volumes and actual production volumes, and its effect on budgeted costs.

Variable Overhead

Costs that fluctuate with changes in production level or activity, such as utilities or materials, within the manufacturing overhead category.

Rate Variance

It is the difference between the actual rate paid for an item or service and the expected (standard or budgeted) rate, often used in budgeting and cost management.