Which of the Following Statements Is True

question 13

Multiple Choice

Which of the following statements is true?

• A) Most credit arrangements use promissory notes.
• B) Promissory notes are used when firms do not anticipate a problem with collections.
• C) Promissory notes usually involve no cash discount.
• D) All of these.
• E) None of these.

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Definitions:

Net Operating Working Capital

The difference between a company's operating current assets and its operating current liabilities, indicating the efficiency and short-term financial health in the company's core operations.

Terminal Loss

The amount that can be deducted against income if, on the sale of the last asset in an asset class, the undepreciated capital cost is positive.

CCA Recapture

In Canadian taxation, the portion of the Capital Cost Allowance that is added back to income when an asset is disposed of for more than its undepreciated capital cost.

Risk-adjusted Cost of Capital

The rate of return that must be achieved in order to compensate for the risk of an investment, adjusting the cost of capital according to the risk involved.