Trade Credit and Accrual Accounts Are Always Costless Sources of Spontaneous

question 102

True/False

Trade credit and accrual accounts are always costless sources of spontaneous financing for the firm.

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Definitions:

Borrowed

Describes money that has been taken from another party with the agreement that it will be repaid, typically with interest.

Daily Interest

Interest calculation method where the interest is accrued daily.

Savings Account

A bank account where money is kept so that it can earn interest over time, typically used for holding funds that are not needed for daily expenses.

Annual Simple Interest

Interest calculated once a year on the principal sum, without compounding.