VEE ACCOUNTING AND FINANCE 1
Which of the following are forms of debt financing?
1. factoring
2. hire purchase
3. retained earnings - CORRECT ANSWER -1 + 2
also debt securities, bank loans, bank overdrafts, accrued expenses, and trade credit
In a ________ factoring, the factor takes over all responsibility for the accounts, including the
payment collection and _________ loss. - CORRECT ANSWER -non-recourse, credit
In a _________, the borrower makes regular payments for the goods rented and own the goods after
all payments are made. - CORRECT ANSWER -hire purchase
Bank overdraft is a _____-term debt financing. A bank _______ demand immediate repayment of an
overdraft with no prior notice - CORRECT ANSWER -short, can
Accrued expenses are expenses that have been incurred during a period but have not been paid by
the end of that period. The deferral of such payments allows the companies to use the funds until
they are due _____ interest cost. It is a _____-term source of financing - CORRECT ANSWER -without,
short
Which of the following statements is / are correct?
(i) Only corporations issue bonds.
(ii) Issuance of commercial papers is a form of short-term financing.
(iii) Small, newly established companies usually issue commercial papers to obtain funding. -
CORRECT ANSWER -Only (ii).
Many governments issue bonds. For example, in the US, the government issues Treasury securities.
A commercial paper is a short-debt obligation issued by large banks. It is usually used by large
corporations.
Which of the following statements concerning corporate bonds is / are correct?
(i) Corporate bonds can be classified by the type of coupon.
