Which of the Following Is a Difference Between Trade and Non-Trade

question 74

Multiple Choice

Which of the following is a difference between trade and non-trade receivables?

• A)Trade receivables are generally recorded using present value techniques versus non-trade receivables, which are generally recorded using market interest rates.
• B)Trade receivables are generally outstanding for long periods of time versus non-trade receivables, which are generally outstanding for short periods of time.
• C)Trade receivables are generally verbal contracts versus non-trade receivables, which are generally written contracts.
• D)Trade receivables are generally verbal contracts versus non-trade receivables, which are generally constructive contracts.

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Definitions:

Annually Compounded

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, once per year.

Nominal Interest Rate

The interest rate before adjustments for inflation or other factors that affect the real value of money.

Annual Rate

The interest rate for a whole year, as opposed to a shorter period, such as monthly or quarterly.

Compounded Annually

The calculation of interest on the original principal and the accumulated interest of prior periods, applied once per year.