All Else Equal, When a Firm Purchases Raw Materials on Credit

question 3

Multiple Choice

All else equal, when a firm purchases raw materials on credit from its supplier, which of the following accounts is affected?

• A)Accruals
• B)Cash
• C)Accounts payable
• D)Accounts receivable
• E)Notes payable

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Definitions:

Ethanol Imported

Refers to ethanol (a biofuel) that is bought from foreign producers and brought into a country’s borders, often used as an additive in gasoline.

Consumer Surplus

The contrast between the total expenditure consumers are willing to make on a good or service and the total expenditure they actually make.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, representing profit.

Import Restrictions

Measures by governments to control the quantity or quality of goods and services coming into a country to protect domestic industries from foreign competition.