When Managing Accounts Payable, a Good Strategy Would Be to ________

question 206

Multiple Choice

When managing accounts payable, a good strategy would be to ________.

• A) pay as early as possible creating better credit rating for a firm
• B) pay as slowly as possible without damaging a firm's credit rating
• C) pay big customers early to maintain good relations and small customers on a later date
• D) pay only when a firm has adequate funds to meet its liabilities

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Definitions:

Drawing Account

A separate account used to track the amount of money or assets taken out of a business by its owners for personal use.

Separate Capital Account

An account used in partnerships and sole proprietorships that shows the owner's original investment plus any retained earnings or minus any losses and withdrawals.

Partnerships

A form of business organization in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a partnership agreement.

Treasury Stock

Treasury Stock represents shares that were issued and subsequently repurchased by the company, reducing the amount of outstanding stock on the open market.