Determination of a Firm's Investment in Current Assets and How

question 116

True/False

Determination of a firm's investment in current assets and how that investment is financed are elements of working capital policy.

Grasp the significance of per capita income and GDP in assessing economic health.

Recognize the importance of consumer price index in measuring inflation.

Understand government fiscal policies related to budget deficits and surplus.

Know the historical development of the American economy, including the transition from agriculture to industry.

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Definitions:

Capital Lease

A lease classified as a purchase by the lessee for accounting purposes, where the lessee essentially buys the leased asset.

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow on a collateralized basis over a similar term the funds necessary to lease an asset.

Lessor's Implicit Interest Rate

The interest rate in a lease agreement that, when applied to the minimum lease payments, causes the present value of those payments to equal the fair value of the leased asset.