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- Which of the following is not a way in which banks lend short-term unsecured loans? a. Through a guaranteed credit line that has a commitment fee for any unused amount for the year b. Through credits cards lines with a certain credit limit c. By sending the amount earned from trust and investment products offered by the bank d. By lending a single date maturity loan to a debtorWhere the operating cycle extends beyond one year because of normal credit terms as in the case of installment sales. a. The entire receivables are classified as current with disclosure of the amount not realizable within one year b. The entire receivables are shown as noncurrent c. The portion due in one year is shown as current and the balance as noncurrent d. The entire receivables are not recordedCommercial (in contrast to consumer) line of credit is an agreement between a customer and a bank that a. is renewed at the end of the contract period in an evergreen facility. b. gives the customer the right to borrow up to a predetermined amount. c. is usually for one year or longer. d. may not obligate the bank to honour the customer’s request for a loan The APR is a. the average annual percentage cost paid on deposits b. the average rate paid on deposits c. the average rate paid for credit d. the average annual percentage cost paid for credit
- Which of the following statement is true of amortization? The computation of loan amortization is wholly based on the computation of simple interest. Amortization solely refers to the total value to be paid by the borrower at the end of maturity. The amortization schedule represents only the interest portion of the loan. The amortization schedule provides principal, interest, and unpaid principal balance for each month. In a typical loan amortization schedule: The amount of money paid towards reducing the loan balance decreases over time. The amount of interest paid each period does not remain constant. The amount of each payment does not remain constant. The amount of interest paid each period increases over time.2.Which of the following statements is valid? a. Net accounts receivable is not affected by a recovery of an account previously written off. b. A three year, non-interest bearing promissory note is initially recorded in the accounts at its face value. c. When individual customers' accounts have credit balances of material amounts, these amounts must be deducted from the debit balance in other customers' accounts in the statement of financial position. d. When the rate stated on a note is greater than the prevailing market rate of interest for similar obligations, the present value of the note at initial recognition is greater than its face value.Calculate the missing information for the installment loan that is being paid off early. Number ofPayments PaymentsMade PaymentsRemaining Sum-of-the-Digits PaymentsRemaining Sum-of-the-Digits Numberof Payments RebateFraction 36 25 11 66
- A company that uses a bill facility to provide finance for a period of two years: A. is exposed to interest-rate risk B. will not be required to make any payment until the end of the facility. C. will issue bank bills that mature in two years' time. D. will initially receive the bills' face value. E. all of these.Which of the following is not a way in which banks lend short-term unsecured loans? Through credits cards lines with a certain credit limit Through a guaranteed credit line that has a commitment fee for any unused amount for the year By sending the amount earned from trust and investment products offered by the bank By lending a single date maturity loan to a debtorNon-performing loans are defined as loans that: a. are either in default or close to being in default and are at least 90 days in arrears. b. have been written off and loans that are at least 80 days in arrears. c. are either in default or close to being in default and are at least 60 days in arrears. d. have been written off and loans that are at least 60 days in arrears.
- Which one of the following statements concerning bad debt expenses is correct? Select one: a. When you write off an accounts receivable, you debit bad debt expense and credit accounts receivable. b. You record bad debt expense when individual accounts receivable becomes uncollectible. c. Under the percentage of receivables method, bad debt expense is the year-end receivables multiplied by the % of uncollectible accounts. d. When the allowance method is used, bad debt expense is recorded before the accounts are written off.Which of the following is FALSE The APR is the annual rate that is required by law to be disclosed on loan documents. The EAR allows for comparison between savings accounts that have different compounding frequencies US treasury bills are considered pure discount loans the cash flows of preferred stock are considered an annuity. car loans are considered amortized loans because each payment includes interest and some principalMajestic company has a credit balance of the allowance for doubtful account that exceeds the amount of a bad debt being written off, the journal entry to record the write off results in: a. A reduction in current liabilities b. No effect on the bad debts expenses of the current period O C. An increase in current assets d. An increase in the expenses of the current period