A Revolving Credit Agreement Is

question 48

Multiple Choice

A revolving credit agreement is:

• A) created because of recurring short-term liabilities such as wages and taxes that change spontaneously with operations.
• B) the credit created when one firm buys on credit from another firm.
• C) an outright sale of receivables.
• D) an unsecured, short-term promissory note issued by large, financially sound firms to raise funds.
• E) a formal, committed arrangement in which a bank agrees to lend up to a specified maximum amount of funds during a designated period.

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Definitions:

Act of Bankruptcy

A specific action or failure to act that renders an individual or entity legally insolvent, triggering potential bankruptcy proceedings.

Unsecured Creditors

Creditors who have loaned money without obtaining specific collateral, meaning they have no special claim to the borrower's assets if the borrower fails to pay.

Bankruptcy Discharge

The legal process that releases a debtor from personal liability for certain specified types of debts, effectively wiping the slate clean.

Bankruptcy Law

A legal framework governing the process by which individuals or entities unable to meet their financial obligations can seek relief from some or all of their debts.