### Question Analysis**Question:**A flexible short financial policy will tend to have more of which of the following than a restrictive short-term financial policy will? **Options:** 1. Uncollectable accounts receivable 2. Work stoppages for lack of raw materials 3. Carrying costs 4. Obsolete or out-of-date inventory --- ### Correct Answer A **flexible** short-term financial policy means keeping higher levels of current assets (cash, inventory, receivables). This leads to: - Higher carrying costs - Higher risk of obsolete inventory **Answer:** **3. Carrying costs** **4. Obsolete or out-of-date inventory** Both (3) and (4) are correct, but if you can only select one, the best answer is typically **3. Carrying costs**. --- #### **Explanation:** - Flexible policies = More inventory & receivables = Higher carrying costs and risk of obsolescence. - Restrictive policies = Less inventory & receivables = More risk of stockouts or work stoppages, but lower carrying costs. --- **Summary:** A flexible short-term financial policy will tend to have **more carrying costs (option 3)** and possibly more **obsolete inventory (option 4)** than a restrictive policy.