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

---

Definitions:

Gold Futures

Contracts for the future delivery of gold at a specified price, used for hedging and investing purposes.

Arbitrage Profit

The profit made from buying and selling equivalent financial instruments or capitalizing on price differences in different markets to generate a risk-free return.

Risk-free Rate

The theoretical rate of return of an investment with zero risk, typically associated with government bonds.

Swap Market

A marketplace where parties exchange financial instruments, such as interest rates or currencies.