Violations of the Requirements of a Note That Do Not

question 28

Multiple Choice

Violations of the requirements of a note that do not disrupt the payments on the loan tend to be viewed as "technical" defaults. In practice, how many days must a payment be overdue in order for lenders to treat a default as serious (i.e., a substantive default) ?

• A) One day
• B) 30 days
• C) 60 days
• D) 90 days

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Indirect Method

An accounting technique used to allocate costs to specific cost objects indirectly, typically by using cost drivers or allocation bases.

Investing Activities

Financial actions that involve the purchase and sale of long-term assets and investments not included in cash equivalents.

Net Cash

The amount of cash available after accounting for cash inflows and outflows, used to measure liquidity and cash position of a business.