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International Trade and Financial Markets

Chapter 15

Accounts payable are spontaneous secured sources of short-term financing that arise from the normal operations of the firm.

Notes payable can be either spontaneous secured or spontaneous unsecured financing and result from the normal operations of the firm.

Accounts payable result from transactions in which merchandise is purchased but no formal note is signed to show the purchaser's liability to the seller.

In credit terms, EOM (End-of-Month) indicates that the accounts payable must be paid by the end of the month in which the merchandise has been purchased.

Accruals are liabilities for services received for which payment has yet to be made.

The cost of giving up a cash discount is the implied rate of interest paid in order to delay payment of an account payable for an additional number of days.

In giving up a cash discount, the amount of the discount that is given up is the interest being paid by the firm to keep its money by delaying payment for a number of days.

Chapter 18

NAFTA is a treaty establishing free trade and open markets between Europe and the United States.

The World Trade Organization is a new international body established to police world trading practices and to mediate disputes between member countries.

Offshore Centers are cities or states that have achieved prominence as major centers for Euromarket business.

NAFTA is an international financial market that provides for borrowing and lending currencies outside their country of origin.

Fluctuations in foreign exchange markets can affect foreign revenues and profits of a multinational company, but they have no impact on its overall value.

The Euromarket is the international financial market that provides for borrowing and lending currencies outside their country of origin.

The existence of specific regulations and controls on dollar deposits in the United States, including interest rate ceiling imposed by the government, have contributed to the growth of the Euromarket.

Solution Preview

Chapter 15
Accounts payable are spontaneous secured sources of short-term financing that arise from the normal operations of the firm. FALSE

Notes payable can be either spontaneous secured or spontaneous unsecured financing and result from the normal operations of the firm. FALSE

Accounts payable result from transactions in which merchandise is purchased but no formal note is signed to show the purchaser's liability to the seller. TRUE

In credit terms, EOM (End-of-Month) indicates that the accounts payable ...

Solution Summary

Answer clearly important points on concepts of International trade, foreign trade like accounts payable, Notes payable by answering True or false questions.

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