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:

Semi-annual compounded

Interest on an investment is calculated twice a year and added to the principal.

Nominal rate

The stated or face interest rate on a loan or investment, not adjusted for inflation or the frequency of compounding.

Compounded annually

A way of calculating interest where the interest is added to the principal at the end of each year, leading to an increase in the amount on which the following year's interest is calculated.

RRSP fund

A Registered Retirement Savings Plan (RRSP) fund is a retirement savings plan sponsored by the Canadian government, allowing citizens to save for retirement on a tax-sheltered basis.