Match the items of List – I with the items of List – II : List-IList-II (a) Trade credit and other…
Trade credit and other payables that arise automatically from day-to-day operations are spontaneous financing, and matching the maturity of financing with the firm's asset…
Choose your answer
Match the items of List – I with the items of List – II :
| List-I | List-II |
|---|---|
| (a) Trade credit and other payables that arise in the firm’s day today operations | (i) Maturity Financing |
| (b) Financing and asset needs over time | (ii) Factoring |
| (c) A tool for accelerating the collection from the customers | (iii) Spontaneous financing |
| (d) Seeking financial service to finance on its debtors’ balances | (iv) Lockbox system |
Answer and explanation
Correct answer B
Trade credit and other payables that arise automatically from day-to-day operations are spontaneous financing, and matching the maturity of financing with the firm's asset needs over time is maturity (hedging) financing. A lockbox system speeds up collections by having customers send payments to a post-office box cleared directly by the bank, and raising finance on debtors' balances through a specialist agency is factoring. That gives (a)-(iii), (b)-(i), (c)-(iv), (d)-(ii).
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UGC NET Commerce