The "5 Cs of Credit" Are

question 31

Multiple Choice

The "5 Cs of Credit" are:

• A) character, capacity, collateral, cash flow, and condition.
• B) character, cash flow, collateral, capital, and condition.
• C) character, capacity, collateral, capital, and convenience.
• D) character, capacity, compensation, capital, and condition.
• E) character, capacity, collateral, capital, and condition.

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Definitions:

Accounts Payable

A liability account that tracks money owed by a business to suppliers or creditors for goods and services purchased on credit.

Notes Payable

A financial liability on a company's balance sheet representing promissory notes that require future payments of principal and possibly interest.

Maturity Value

The amount due to the owner of a financial instrument at its maturity date, including principal and interest.

Default

Failure of maker to pay the maturity value of a note when due.