Multiple Choice
Which type of accounting provides managers with information and incentives to perform well within an organization?
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1. Introduction to Accounting
Types of Accounting
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following is NOT a characteristic of commercial paper?
A
It is used to finance short-term liabilities.
B
It typically has a short maturity period.
C
It is generally issued by government agencies.
D
It is usually unsecured.
Verified step by step guidance1
Understand the concept of commercial paper: Commercial paper is a short-term, unsecured promissory note issued by corporations to finance their short-term liabilities, such as accounts payable or inventory purchases.
Review the characteristics of commercial paper: It is typically unsecured, meaning it is not backed by collateral. It also has a short maturity period, usually ranging from a few days to 270 days.
Analyze the options provided: The first three options describe characteristics of commercial paper, such as financing short-term liabilities, having a short maturity period, and being unsecured.
Identify the incorrect statement: Commercial paper is not issued by government agencies. Instead, it is issued by corporations with high credit ratings to meet their short-term funding needs.
Conclude that the correct answer is the statement that does not align with the characteristics of commercial paper, which is 'It is generally issued by government agencies.'
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