Question Bank - Accountancy

Here's the question bank on all the accountancy topics.

Deferred payment arrangement aim at financing

A.
working capital needs
B.
redemption of debts
C.
purchase of GDRs
D.
import of plant and machinery

Solution:

The correct answer is import of plant and machinery. Deferred Payment:A loan arrangement in which the borrower is allowed to start making payments at some specified time in the future. Deferred payment arrangements are often used in retail settings where a person buys and receives an item with a commitment to begin making payments at a future date. Many times suppliers of machinery provide deferred credit facilities under which payment for the purchase of machinery can be made over a period of time. The entire cost of the machinery is financed and the company is not required to contribute any amount initially towards the acquisition of the machinery. Therefore, the Deferred payment arrangement aims at financing the import of plant and machinery. 1. Working capital financeWorking capital finance is business finance designed to boost the working capital available to a business. It's often used for specific growth projects, such as taking on a bigger contract or investing in a new market. Different businesses use working capital finance for a variety of purposes, but the general idea is that using working capital finance frees up cash for growing the business which will be recouped in the short- to medium-term. A deferred payment arrangement may also include financing working capital needs eg. Trade credit. 1. Redemption of debtRedemption describes the repayment of any money market fixed-income security at or before the asset's maturity date. Investors can make redemptions by selling part or all of their investments such as shares, bonds, or mutual funds. 2. GDRs:Global Depository Receipt (GDR) is an instrument in which a company located in a domestic country issues one or more of its shares or convertibles bonds outside the domestic country. In GDR, an overseas depository bank i. e. bank outside the domestic territory of a company, issues shares of the company to residents outside the domestic territory. Such shares are in the form of a depository receipt or certificate created by overseas the depository bank.

For more questions,

Click Here

Download Gyanm App

free current affairs for competitive exams

Scan QR code to download our App for
more exam-oriented questions

free current affairs for competitive exams

OR
To get link to download app

Thank you! Your submission has been received. You will get the pdf soon. Call us if you have any question: 9117343434
Oops! Something went wrong while submitting the form.