An Operating Line of Credit

question 53

Multiple Choice

An operating line of credit

• A) is a non-current liability.
• B) is required by all companies.
• C) helps companies manage temporary cash shortages.
• D) is usually required by the bank in case a company is unable to repay a loan.

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Definitions:

Equity Method

An accounting technique used by firms to account for their investments in other companies when they hold significant influence but not full control.

Swaps

Financial derivatives where two parties exchange financial instruments or cash flows for a set period according to specified terms.

Economic Benefit

The gain received by an entity as a result of an action taken or a decision made, which contributes to the entity's wealth.

Transactions Rationale

The underlying reasons or business logic behind carrying out specific transactions within a company.