Question 1. Trade credit terms quoted as "3/15, net 45" means the customer:
A. Would receive a 3% discount if payment is made within 15 days.
B. Would receive a 3/15 or one-fifth discount if payment is made immediately after
receiving the shipment.
C. Would receive a 3% discount if the net amount is paid on the 45th day.
D. Would receive a discount even if payment is made after 45 days.
Question 2. To follow the matching principle, if a healthcare firm builds and operates a new hospital building, it would finance the building by:
A. Issuing common stock.
B. Reducing long-term debt.
C. Issuing commercial paper.
D. Reducing its overhead
Question 3. Usually short-term interest rates are:
A. Equal to long-term rates.
B. Higher than long-term rates.
C. Lower than long-term rates.
D. Inversely related to long-term rates.
Question 4. The economic order quantity (EOQ) varies:
A. Directly with the prevailing interest rate.
B. Directly with the cost of making an order.
C. Directly with the holding cost.
D. As companies expand.
Question 5. All of the following are considered inventory holding costs EXCEPT:
A. Cost to purchase inventory.
B. Cost to monitor inventory.
C. Cost to store inventory.
D. Cost to pay debt.