Which of the Following Statements Is False

question 22

Multiple Choice

Which of the following statements is false?

• A) Under the Modigliani-Miller assumptions of perfect capital markets, the amounts of payables and receivables are irrelevant.
• B) One factor that contributes to the length of a firm's receivables and payables is the delay between the time a bill is paid and the cash is actually received.
• C) Collection float is the amount of time it takes before payments to suppliers actually result in a cash outflow for the firm.
• D) The credit that the firm is extending to its customer is known as trade credit.

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Definitions:

Prescription Drugs

Medications that require a doctor’s prescription before they can be purchased or dispensed.

Deductible

An expense that can be subtracted from gross income to reduce the amount of taxable income.

Tax Return

A document filed with a tax authority reporting income, expenses, and other pertinent tax information. Tax returns are mandatory to accurately report one’s income tax liability.

Home Mortgage Interest

Interest paid on a loan secured by a principal residence or a second home, which can be deductible on federal income tax returns under certain conditions.