Assuming That We Can Earn a 10% Return on Accounts

question 28

Multiple Choice

Assuming that we can earn a 10% return on accounts receivable, which of the following strategies to finance an increase in our accounts receivable balance would be optimal?

• A) An increase in bank loans that would cost us 8%
• B) A decrease in inventories that are earning a 16% return
• C) A reduction in marketable securities that are earning a return of 14%
• D) An increase in accounts payable that would cost our firm 15%

Grasp the historical context of U.S. trade policies and their economic impacts.

Analyze the effects of tariffs and trade agreements on international trade.

Comprehend the principle of comparative advantage and its application to international trade.

Recognize the factors influencing trade deficits and surpluses, including the role of services and goods.

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Definitions:

Raw Materials

The basic materials that are processed or used in the manufacturing of goods or finished products.

Predetermined Overhead Rate

A calculated figure used for assigning the estimate of manufacturing overhead costs to individual units of production, based on a set rate determined at the beginning of an accounting period.

Direct Materials Cost

The total cost of all the raw materials used in the production of a product or service.

Machine-hours

A measure of the amount of time a machine is operated, used in calculating manufacturing costs and allocating expenses based on machine usage.