Foundations Of Finance
10th Edition
ISBN: 9780134897264
Author: KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher: Pearson,
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Chapter 15, Problem 17SP
Summary Introduction
To discuss: Whether the given sources of short-term credits are secured or unsecured.
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Students have asked these similar questions
. Accounts receivable financing is the term used to describe which of the following types of loans that involve either the assignment or the factoring of a firm's accounts receivable?
A.
Secured short-term loan
B.
Unsecured short-term loan
C.
Secured long-term loan
D.
Unsecured long-term loan
E.
Trust receipt loan
Explain the following terms: credit transfer, dishonoured cheque, standing orderand give examples, the purposes, advantages and disadvantages
match the correct term for each of the following descriptions.
Descriptions
Terms
Examples of these instruments include trade credit, accruals, short-term bank loans, and commercial paper.
Accruals
A document that provides evidence of the existence of a debt, and specifies the terms of the loan transaction.
Blanket lien
The cost of accounts payable paid before the expiration of the discount period.
Commercial paper
This financial instrument uses a borrowing firm’s entire inventory of low-priced, fast selling, and fungible products to secure a short-term loan, and allows the borrower to sell items from inventory without the lender’s permission.
Commitment fee
A fee charged by a financial institution providing a guaranteed, or revolving, line of credit, on the unused balance of a revolving line of credit.
Discount interest loan
A form of unsecured short-term financing used by large, extremely creditworthy business organizations.
Factoring
A financial…
Chapter 15 Solutions
Foundations Of Finance
Ch. 15 - Dell Computer Corporation (DELL) has long been...Ch. 15 - Prob. 2RQCh. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Explain what is meant by the statement The use of...Ch. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - How can the formula interest = principle rate ...Ch. 15 - How can we accommodate the effects of compounding...Ch. 15 - Prob. 10RQ
Ch. 15 - Prob. 11RQCh. 15 - Prob. 12RQCh. 15 - Prob. 1SPCh. 15 - Prob. 2SPCh. 15 - Prob. 3SPCh. 15 - (Estimating the cost of bank credit) Paymaster...Ch. 15 - (Cost of short-term financing) The R. Morin...Ch. 15 - (Cost of secured short-term credit) The Marlow...Ch. 15 - (Cost of short-term financing) You plan to borrow...Ch. 15 - Prob. 8SPCh. 15 - (Cost of trade credit) Calculate the effective...Ch. 15 - (Annual percentage yield) Compute the cost of the...Ch. 15 - Prob. 11SPCh. 15 - (Cost of accounts receivable) The Michelin...Ch. 15 - (Cost of accounts receivable) The Michelin...Ch. 15 - (Cost of factoring) MDM, Inc. is considering...Ch. 15 - (Cost of factoring) A factor has agreed to lend...Ch. 15 - Prob. 16SPCh. 15 - Prob. 17SP
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Similar questions
- Which method delays recognition of bad debt until the specific customer accounts receivable is identified? A. income statement method B. balance sheet method C. direct write-off method D. allowance methodarrow_forwardWhat is the distinguishing characteristic between accounts receivable and notes receivable? a. Notes receivable generally specify an interest rate and a maturity date at which any interest and principle must be repaid. b. Notes receivable result from credit sale transactions for merchandising companies, while accounts receivable result from credit sale transactions for service companies. c. Accounts receivable require payment of interest while notes receivable does not have payment of interest. d. Accounts receivable are usually current assets while notes receivable are usually long-term assets.arrow_forwardWhich of the following expresses the distinction between accounts receivable and notes receivable? Accounts receivable requires payment of interest; notes receivable does not. Notes receivable generally specifies an interest rate and a maturity date at which any interest and principle must be repaid; accounts receivable does not. Notes receivable results from credit sale transactions for merchandising companies; accounts receivable results from credit sale transactions for service companies. Accounts receivable usually includes current assets; notes receivable usually includes noncurrent assets.arrow_forward
- The trade and other receivables note will include the following items. A.Debtors control-allowance for credit losses+prepaid expenses B.Debtors control +allowance for credit losses - prepaid expenses C.Debtors control + allowance for credit losses + prepaid expenses C.Debtors control-allowance for credit losses - accrued expenses D.None of the abovearrow_forwardWhich of the following is a type of off-Balance Sheet activity? a. A demand loan. b. A Letter of credit c. A credit card account. d. A deposit account.arrow_forwardWhich of the following is money kept by the firm with a bank in low-interest or non-interest bearing accounts as part of the loan agreement? A - short-term financing B- secured loans C- compensating balance D- line of creditarrow_forward
- The trade and other receivables note will include the following items? A. Debtors control + allowance for credit losses - prepaid expenses B. None of the above C. Debtors control - allowance for credit losses - accrued expenses D. Debtors control - allowance for credit losses + prepaid expenses E. Debtors control + allowance for credit losses + prepaid expensesarrow_forwardWhich of the following is considered receivables? (select all that applies) rents note payables loans Note receivablesarrow_forwardWhich of the following is true when accounts receivable are factored without recourse? a. The transaction may be accounted for either as a secured borrowing or as a sale, depending upon the substance of the transaction. b. The financing cost (interest expense) should be recognized ratably over the collection period of the receivables. c. The receivables are used as collateral for a promissory note issued to the factor by the owner of the receivables. d. The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables.arrow_forward
- Which of the following is a secured loan? A - All of these are secured loans B - accounts receivable financing C- line of credit D- compensating balancearrow_forwardLoans backed by tangible assets are known as _____ loans. open-end creditrevolving credit unsecuredsecuredarrow_forwardWhich of the following is not a correct statement? Accounts receivable represents credit sale, and thus, cannot be collected until maturity. Accounts receivable mainly consists of promissory notes and credit sales. Accounts receivable is part of the current assets. Accounts payable mainly consists of purchase of inventory on credit and notes payable. Accounts payable is part of the current liabilities.arrow_forward
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