Trade Credit May Be Used to Finance a Major Part

question 21

Multiple Choice

Trade credit may be used to finance a major part of the firm's working capital when

• A) the firm extends less liberal credit terms than the supplier.
• B) the firm extends more liberal credit terms than the supplier.
• C) the firm and the supplier both extend the same credit terms.
• D) neither the firm nor the supplier extends credit.

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Definitions:

°C

A unit of temperature on the Celsius scale, a temperature scale originally known as the centigrade scale, with 0°C denoting the freezing point of water and 100°C its boiling point at sea level.

Atm

A unit of pressure defined as being equal to the pressure exerted by the Earth's atmosphere at sea level; approximately 101.325 kPa.

Volume

The amount of space that a substance or object occupies, or that is enclosed within a container.

°C

a unit of temperature on the Celsius scale, a measure relative to 0°C for the freezing point and 100°C for the boiling point of water at sea level.