A Firm Tries to Extend Its Disbursement Float in Order

question 33

Multiple Choice

A firm tries to extend its disbursement float in order to reduce its working capital needs. Which of the following is a risk that may be associated with this strategy, if it is taken too far?

• A)may attract a late fee
• B)may jeopardise the entire relationship with the supplier
• C)may be required to pay before delivery for future supplies
• D)all of the above

---

Definitions:

Capital Balances

Reflects the amount of capital that each partner or shareholder has contributed to a partnership or corporation, or their ownership stake.

Partners' Capital Statement

A financial statement showing the changes in each partner's capital account of a partnership during a specific period.

Partnership Expenses

Costs incurred by a partnership in the course of its business activities, which are shared by the partners.

Additional Investments

Extra funds put into a business by its owners or shareholders, beyond the initial investment, to support operations, growth, or expansion.