Which of the Following Statements Is FALSE

question 2

Multiple Choice

Which of the following statements is FALSE?

• A)After a firm decides on its credit standards,it must next establish its credit terms.
• B)The decision of how much credit risk to assume plays a large role in determining how much money a firm ties up in its payables.
• C)Knowledge of the payments pattern is also useful for forecasting the firm's working capital requirements.
• D)An aging schedule categorizes accounts by the number of days they have been on the firm's books.

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Definitions:

Float Motive

The rationale for holding money in transaction accounts to satisfy daily operational cash flow needs.

Liquidity

The ease with which an asset or security can be converted into cash without affecting its market price.

Long-term Maturities

Refers to debt securities or loans with repayment periods typically exceeding one year, often associated with bonds or long-term loans.

Money Market

is a segment of the financial market where short-term financial instruments and securities are traded, offering liquidity and lower risk.