MCQ 11 Mark
Read the information given below and select the correct option It is a festival season two months from now and the shoe manufacturer, Rahim, has received an order from a large trader in town for 3,000 pairs of shoes to be delivered in a month's time. To complete production on time. Rahim has to hire a few more workers for stitching and pasting work. He has to purchase raw materials To meet these expenses. Rahim obtains loans from two sources. First, he asks the leather supplier to supply leather now and promises to pay him later. Second, he obtains a loan in cash from the large trader as an advance payment for 1000 pairs of shoes with a promise to deliver the whole order by the end of the month. At the end of the month, Rahim is able to deliver the order, make a good profit, and repay the money that he had borrowed. Which situation best describes the above case?
- ADemand Draft facility
- BCheque facility of Bank
- CCredit Situation.
- DActivities of Self Help Groups
Answer
View full question & answer→(c) Credit Situation
Explanation:
In this case, Rahim obtains credit to meet the working capital needs of production. The credit helps him to meet the ongoing expenses of production, complete production on time, and thereby increase his earnings. Credit therefore plays a vital and positive role in this situation
Explanation:
In this case, Rahim obtains credit to meet the working capital needs of production. The credit helps him to meet the ongoing expenses of production, complete production on time, and thereby increase his earnings. Credit therefore plays a vital and positive role in this situation
