A) Which of the major sources of short-term financing are spontaneous sources (arise from ordinary business transactions and increase automatically as sales increase) 1) bank loans 2) accruals and accounts payable 3) commercial paper 4) all of the above

B) Which of the following create an accrual 1) John has worked for DDD, Inc. for 3 weeks and will be paid at the end of the month 2) DDD, Inc. has earned large profits but is not scheduled to make an income tax payment for 2 weeks 3) DDD, Inc. bought $100,000 of inventory on account 4) both a and b create an accrual

C) Which of the following increase accounts payable 1) John has works for DDD, Inc. for 3 weeks and will be paid at the end of the month 2) DDD, Inc. earns large profits but is not scheduled to make an income tax payment for 2 weeks 3) DDD, Inc. buys $100,000 of inventory on account 4) both a and b increase accounts payable

D) Most of Jessica, Inc. suppliers provide credit terms of 2/10, n/30. Jessica, Inc. has a policy of paying just in the 30 day required period in order to keep funds in the company checking account longer. 1) This policy costs Jessica, Inc. nothing. The company gets to use its money longer and missing the 2% discount is worth gaining the extra days 2) Missing the discount period will reflect badly on Jessica. Inc.s credit rating 3) Missing the 2% discount to use the money for 20 more days is the equivalent to paying nearly 44 % annual interest rate 4) the credit terms 2/10, n/30 are never seen in the real world

E) A promissory note 1) states the amount borrowed 2) includes the repayment schedule 3) specifies collateral on the loan 4) all of the above