Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Answer:
(a) True.
Explanation:
It should also be known that however, the firm is still responsible for the loan even if the receivables ultimately cannot be collected. The risk of default on the receivables is therefore borne by the firm. An alternative procedure is to sell the receivables at a discount to a financial institution known as a factor and let it collect the money. In other words, some companies solve their financing problem by borrowing on the strength of their current assets; others solve it by selling their current assets. Once the firm has sold its receivables, the factor bears all the responsibility for collecting on the accounts. Therefore, the factor plays three roles: it administers collection of receivables, takes responsibility for bad debts, and provides finance.
Answer:
d. sinking fund.
Explanation:
A bond refers to a debt or fixed investment security, in which a bondholder (creditor or investor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time.
Generally, the bond issuer is expected to return the principal at maturity with an agreed upon interest to the bondholder, which is payable at fixed intervals.
A sinking fund is a provision of a bond indenture which is designed to ease the burden of principal repayment by spreading it out over several years.
<em>Hence, a sinking fund is generally viewed or assumed to protect the bondholders such as creditors or investors because the fund set aside would serve as a collateral incase the bond issuer can't pay in the future. </em>
Answer: b. shoe-leather costs
Explanation:
This is the shoe-leather cost inflation. It refers to the time and effort expended by people to ensure that they are able to avoid their cash losing too much value to inflation. Includes for instance, going to the bank multiple times because you are holding little cash on hand so it does not lose value.
It is named shoe-leather costs as a play on words because it is assumed that the time and effort put will result in walking around alot and degrading the quality of your shoes.
