A Disadvantage of Short-Term Debt Over Long-Term Debt Is

question 22

Multiple Choice

A disadvantage of short-term debt over long-term debt is:

• A) a greater likelihood of penalties for early repayment.
• B) greater frequency of re-funding.
• C) less flexibility.
• D) All are disadvantages.

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Definitions:

Percentage of Sales

A financial ratio illustrating how a particular figure on the financial statements reflects a certain percentage of the total sales.

Percentage of Receivables

A method used to estimate the amount of bad debt expense by calculating a fixed percentage of accounts receivable to be uncollectible.

Uncollectible Accounts

Accounts receivable that a company has determined are unlikely to be collected and written off as an expense.

Allowance for Doubtful Accounts

An accounting concept used to estimate the portion of accounts receivable that may not be collected.