(1) How does getting a secured loan using accounts receivable as collateral differ from factoring? (2) Why would lenders want to see that a business already has some level of capitalization before giving it access to more capital by means of a loan?
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A: The following concepts are answered below.
Q: effect to asset, liability and owner's equity if the company repays the bank loan
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A: Answer: True
Q: 1.Describe how the time value of money impacts the terms of a business loan.
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(1) How does getting a secured loan using
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- True or false? Interest received on loans made to borrowers is an example of an investing activity.Why is interest paid on amounts borrowed from banks and other lenders considered to be anoperating activity while the amounts borrowed are financing activities?I. What are terms of credit? From the viewpoint of a short-tent creditor, why do lines of credit increase a company's liquidity? How arc the unused portions of these lines presented in financial statements? 2. Why are investments in marketable securities shown separately from cash equivalents in the balance sheet?
- What are lines of credit? From the viewpoint of a short-term creditor, why do lines of credit increase a company’s liquid-ity? How are the unused portions of these lines presented in financial statements?1.Describe how the time value of money impacts the terms of a business loan.what the effect to asset, liability and owner's equity if the company repays the bank loan
- The _____ ratio gives actual losses on loans, while the ______ ratio gives the extent to which the bank’s assets are devoted to loans. a. loss rate; capitalization b. loss rate; loan risk c. loan risk; loss rate d. operating efficiency; loan riskExplain how the bank’s decisions to increase loan loss provision will affect the above balance sheet and income statement.What types of information about a business would bankers want before extending a loan?
- Which of the following is the function of the financial market ? Select one : a . It decides the interest rate b . It makes loan available c . It channels funds from lenders - savers to borrowers - spenders D. None of theseWhich of the following is related to the Time value principles of money and banking? a. Loan borrowed has to be repaid with interest. b. Stability in business improves the standard of living c. Information is not the basis for decisions d. Investment in Business has risk1.Read the statements below and answer the question - The earnings process should be completed entitling the bank to the right to receive - Obligations arises on the part of the customer to remit fixed or determinable obligations - Amount received is known and if not collected is collectable with reasonable certainty What do the above statement reflect? (A) Revenue recognition principles (B) Expenses recognition principles (C) Provision recognition (D) Debt recognition principles 2.An asset is anything that is capable of generating positive cash flows or other economic benefits in the future either by itself or in combination with other assets which the financial institution has acquired the right to as a result of past transactions or events. Although the capacity of the financial institution to control benefits is usually the result of legal rights, an item may nonetheless satisfy the definition of an asset even there is no legal control. Based on the above statement which of…