Secured Debt Is Debt That

question 36

Multiple Choice

Secured debt is debt that:

• A) carries a fixed interest rate.
• B) is held by a trustee until repayment.
• C) has more than one year until maturity.
• D) has specific collateral backing it.

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Definitions:

Accounts Receivable

Amounts outstanding from customers to a company for goods or services provided but still unpaid.

Sales on Credit

Sales on Credit refer to transactions where the buyer is allowed to pay for goods or services at a later date, making the sale based on trust that payment will be made in the future.

Lockbox Plan

A cash management tool in which incoming cheques for a firm are sent to post office boxes rather than to corporate headquarters. A local bank will collect the contents of the lockbox and deposit the cheques into the company’s local account.

Net Positive Float

The excess of funds available for use due to the time difference between when a check is deposited and when it clears.