1) _______________ arise out of the financing of foreign trade. a. Federal agenc

Question

1) _______________ arise out of the financing of foreign trade.
a. Federal agency securities.
b. Bankers' acceptances.
c. U.S. Treasury bills.
d. Commercial paper.
e. None of the above.

2) Which of the following is not an advantage of trade credit?
a. The amount of extended credit expands and contracts with the needs of the firm.
b.The cost of forgoing the discount is less than the prime rate.
c. Generally no formal agreements are involved in the extension of trade credit.
d. none of the above.

3) Net working capital refers to which of the following?
a. Cash, accounts receivable, and inventory.
b. Notes payable, accruals, and accounts payable.
c. Current assets plus current liabilities.
d. Current assets divided by current liabilities.
e. Current assets minus current liabilities.

4) The cash budget consists of all the following factors except:
a. cash receipts
b. cash disbursements
c. new financing needed
d. net income

Explanation / Answer

1) Banker's acceptance arise out of the financing of foreign trade. Therefore, the correct option is b) Banker's acceptance. 2) The cost of forgoing the discount is less thant the prime rate is the disadvantage of Trade credit. Therefore, the correct option is b) 3) Net working capital is calculated as Current assets minus Current liabilities. Correct option is e) 4) Cash Budget consists of all the factors except net income. Correct option is d) Net income

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