This section consists of Twelve (12) statements. Each statement is worth one (1) mark. You are required to indicate which of the statements are true or false.

	Statement	True	False
1.1	Accrued expenses represent a spontaneous and interest-free source of financing.	True	False
1.2	Cash credit is not the common form of financing for meeting working capital requirements.	True	False
1.3	The basic objective of working capital management is to manage a firms current assets and current liabilities in such a way that a satisfactory level of working capital is maintained in the firm.	True	False
1.4	The longer the processing period of manufacture, the larger the amount of working capital needed.	True	False
1.5	The rate of return on investments increases with the shortage of working capital.	True	False
1.6	Net working capital is the excess of current liabilities over current assets.	True	False
1.7	Credit terms include period of credit and cash discount granted to the customers for early payment.	True	False
1.8	In practice, firms follow credit policies ranging between stringent and lenient policies.	True	False
1.9	If goods are perishable, longer payment period is a desirable receivable management policy.	True	False
1.10	Tradeoff between profitability and liquidity is important for achieving optimum amount of receivables.	True	False
1.11	When the firm sells 2/30, net 60, it means 2% cash discount would be allowed, if payment is made within 60 days.	True	False
1.12	A proper inventory control system helps the enterprise in solving the problems of liquidity, eliminating excessive stocks, and achieving increased profits, with substantial reduction in working capital.	True	False