Answered: A local restaurant decides to take out…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 9PB: Pickles R Us is a pickle farm located in the Northeast. The following transactions take place: A. On...

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A local restaurant decides to take out an amortized loan as follows: Amount of loan = $50,000; Interest rate = 8%; Term = 5 years. After two instalments the borrower decides to pay off the loan. What is the payoff amount?

$32,273

$22,331

$31,543

$31,670

Accrual basis in loan pricing refers to

the number of days used to calculate interest

the effective yield

the method of accounting used to record the loans

none of the above

Which of the following accurately describes the other real estate owned that appears as an asset on the bank’s balance sheet?

includes premises and equipment

includes only the land owned by the bank.

usually represents property obtained through foreclosure on problem loans

is limited to the equipment owned by the bank

Collateral does not reduce the risk of a loan per se, because

it is not part of the loan agreement

the risk of a loan is determined by the borrower’s willingness and ability to repay the loan

it may be worth less than the bank thinks

the bank may not have title to the collateral

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