A Firm Is Considering Changing Their Credit Terms

question 40

Multiple Choice

A firm is considering changing their credit terms.It is estimated that this change would result in sales increasing by $1,000,000.This in turn would cause inventory to increase by $150,000,accounts receivable to increase by $100,000,and accounts payable to increase by $75,000.What is the firm's expected change in net working capital?

• A)$1,175,000
• B)$325,000
• C)$250,000
• D)$175,000
• E)$150,000

Analyze the impact of bond premium or discount amortization on the carrying amount of bonds.

Understand the importance of actuarial information in determining the discount or premium of bonds.

Interpret the relationship between market interest rates, stated interest rates, and their impact on bond pricing and interest expense.

Understand the accounting treatment for the retirement of bonds before their maturity and the recognition of material gains or losses.

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Definitions:

Henry Ford

An American industrialist and founder of the Ford Motor Company, known for revolutionizing the automobile industry with assembly line production.

UNESCO

The United Nations Educational, Scientific and Cultural Organization, a specialized agency aimed at promoting world peace and security through international cooperation in education, the arts, sciences, and culture.

Social Construct

A concept or perception of an idea or practice that has been created and accepted by the people in a society through cultural or social practice.

Biological Fact

A statement or principle that is objectively verifiable and based on empirical evidence from the study of living organisms.