1. Capsule Corp. purchased merchandise from Store Palace on May 1st; terms of purchase were FOB shipping point, 3/5, n/60. The goods were shipped on May 3rd but were lost in transit before they arrived at Capsule Corp.; the shipment was not insured. Which of the following is accurate?
a. Capsule Corp. can hold Store Palace liable for the missing shipment
b. Capsule Corp. does not have to pay store palace for the missing goods
c. Capsule Corp. paid for shipping costs
d. If Store Palace selected the common freight carrier, Store Palace must reimburse Capsule Corp
e. None of the above
2. Stark Industries purchases goods for resale and later returns some of these goods to the seller (a purchase item). This return:
a. decreases price per unit; decreases number of units available for sale
b. decreases price per unit; has no effect on number of units available for sale
c. has no effect on price per unit; decreases number of units available for sale
d. has no effect on price per unit; has no effect on number of units available for sale
e. none of the above
3. Gorilla Grodd Company sells goods to customers; a customer asks and is granted an allowance for a price match guarantee; the customer has already paid and requests a cash allowance. Which of the following statements is true regarding the effect for Gorilla Grodd Company?
a. assets increase; equity increases, net revenues decrease
b. assets decrease; equity decreases, net expenses increase
c. assets decrease; equity decreases, net revenues decrease
d. assets decrease; equity decreases; net expenses increase
e. assets do not change; equity decreases; net revenues decrease
4. The Regeay Business currently has 300,000 of receivables outstanding, but needs to immediate cash in order to take advantage of a business opportunity. The company sells its receivables to a local collection agency for 250,000. This process is known as:
a. factoring
b. secured borrowing
c. credit swap
d. forward option
e. unsecured borrowing