Which of the Following Statements Is CORRECT

question 86

Multiple Choice

Which of the following statements is CORRECT?

• A) A conservative financing policy is one where the firm finances part of its fixed assets with short-term capital and all of its net working capital with short-term funds.
• B) If a company receives trade credit under terms of 2/10 net 30, this implies that the company has 10 days of free trade credit.
• C) One cannot tell if a firm has a conservative, aggressive, or moderate current asset financing policy without an examination of its cash budget.
• D) If a firm has a relatively aggressive current asset financing policy vis-á-vis other firms in its industry, then its current ratio will probably be relatively high.
• E) Accruals are an expensive but commonly used way to finance working capital.

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Definitions:

Affirmative Defense

A legal defense used in litigation where the defendant introduces evidence, which, if found to be credible, will negate criminal or civil liability, even if it is proven that the defendant committed the alleged acts.

Motion for a Default Judgment

A legal request to the court to grant a judgment in favor of the applicant, due to the other party's failure to respond or appear in court.

Interrogatory

A formal set of written questions required to be answered under oath by a party in a lawsuit as part of the discovery process.

Quasi In Rem Jurisdiction

A legal principle allowing a court to exercise jurisdiction over an out-of-state defendant's property within the jurisdiction for the purpose of the lawsuit.