Which of the Following Statements Is False

question 24

Multiple Choice

Which of the following statements is false?

• A) After a firm decides on its credit standards, it must next establish its credit terms.
• B) The decision of how much credit risk to assume plays a large role in determining how much money a firm ties up in its payables.
• C) Knowledge of the payments pattern is also useful for forecasting the firm's working capital requirements.
• D) An aging schedule categorizes accounts by the number of days they have been on the firm's books.

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Definitions:

Compounded Annually

An interest calculation method where interest is added to the principal once a year, affecting the calculation of future interest.

Compounded Monthly

An interest calculation method where interest is added to the principal balance monthly, causing the total amount of interest to grow at an increasing rate.

Compounded Annually

The method of calculating interest where the total interest is added to the principal once per year, resulting in interest earning interest annually.

Perpetuity

A type of annuity that pays a fixed sum of money to an individual indefinitely.