Credit, Debt, and Finance

Creditors velocity and debtors velocity are opposing liquidity forces: one increases working capital while the other decreases it. When these velocities are similar in magnitude, they offset each other, resulting in no net effect on overall liquidity position.

Issuing redeemable preference shares increases cash (current asset) without affecting current liabilities, improving the ratio. Selling furniture for cash similarly increases current assets. Cash from debtors merely replaces one current asset (receivables) with another (cash), leaving the ratio unchanged.

Under 'Secured Loans' in the balance sheet, debentures (being long-term secured instruments) are disclosed first, followed by loans from banks (secured against assets). Loans from subsidiaries come next, with 'Other loans and advances' disclosed last. This order reflects the typical hierarchy of secured borrowing, from most formal to least formal.

'Written off' in financial context means to cancel a debt or acknowledge that it will not be collected, essentially removing it from the records as uncollectible. When farmers' debts are written off, they are forgiven and the farmers are no longer required to repay them. Option B (written proper documents) confuses 'written off' with actually writing something, which is incorrect.

Short-term working capital sources include Trade credit (buying now, paying later), Credit papers (commercial paper), and Bank credit (short-term loans). Loans typically refer to long-term borrowing, making it the correct answer as NOT a short-term source.

During deflation, the price level falls, meaning money gains purchasing power. Creditors benefit because they are repaid in money that is worth more than when it was lent. Debtors suffer because they must repay loans with money that has increased in value.

 Cash in hand is the most liquid asset, since we can take out cash from the business very quickly, whenever required.

In accounting, liabilities represent debts or obligations that a business owes to external parties like creditors, lenders, or suppliers. Expenses are ongoing costs, debtors are people who owe the business, and assets are resources owned by the business.

Nominal A/c is concerned with income and expenses, and interest on capital is an expense because it is to be paid to the partners by the firm.

Under this method, all adjustments are made in the partner's current A/c.

It is a charge against profit because it is paid to partner before calculating the profit and has to be paid even if there is a loss.

The Subprime Crisis refers to the sharp increase in high-risk mortgage defaults and foreclosures that began in 2007. This led to a global financial collapse as mortgage-backed securities lost value. It was characterized by lending to borrowers with poor credit histories (subprime borrowers).

Samurai bonds are yen-denominated bonds issued in Tokyo by non-Japanese companies. They are subject to Japanese regulations and provide issuers access to Japanese capital.

I is strong because higher rates attract people to deposit money for longer duration. If there will be only one rate of interest for term deposits for varying durations, this will adversely affect deposit of money in banks for longer duration and also the liquidity levels of banks. II is not strong because only one rate of interest does not encourage people for more savings.

Option (3) is correct: Judgement debtor means person against whom a decree is passed.