Sunday, November 10, 2019

Rose's Gift Shop borrows money on a short-term basis by pledging its inventory as collateral. This is an example of a(n):


Rose's Gift Shop borrows money on a short-term basis by pledging its inventory as collateral. This is an example of a(n): 
 
A. 
debenture.

B. 
line of credit.

C. 
banker's acceptance.

D. 
working loan.

E. 
inventory loan.
Refer to section 18.5

14.
Which one of the following increases cash? 
 
A. 
granting credit to a customer

B. 
purchasing new machinery

C. 
making a payment on a bank loan

D. 
purchasing inventory

E. 
accepting credit from a supplier
Refer to section 18.1

15.
Which of the following are uses of cash?

I. collecting a receivable
II. increasing inventory
III. obtaining a bank loan
IV. paying a supplier for previous purchases 
 
A. 
I and III only

B. 
II and IV only

C. 
I and II only

D. 
I, II, and IV only

E. 
II, III, and IV only
Refer to section 18.1


16.
Which one of the following will increase net working capital? Assume the current ratio is greater than 1.0. 
 
A. 
paying a supplier for a previous purchase

B. 
paying off a long-term debt

C. 
selling inventory at cost

D. 
purchasing inventory on credit

E. 
selling inventory at a profit on credit
Refer to section 18.1

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