1)Which of the following is not true about cash discounts?

a.They reduce the amount of bad debt expense in the long run.

b.They reduce the operating income of the firm.

c.They shorten the operating cycle of the firm.

d. They discourage customers from paying cash

2) The effective interest rate of a loan with a compensating balance is

a. always higher than the stated rate.

b. always lower than the market rate.

c. always higher than the market rate.

d. always lower than the stated rate.

3)Which of the following is not true about internal controls?

a. Internal controls promote operational efficiency. b. Internal controls minimize errors and theft. c. Internal controls do not include the physical infrastructure of the firm such as controlled access rooms. d. Internal controls encourage adherence to company policies and procedures.