The Primary Difference Between a Line of Credit and a Revolving

question 42

Multiple Choice

The primary difference between a line of credit and a revolving credit arrangement is the

• A)length of the time period covered by the loan agreement.
• B)type of collateral used to secure the loan.
• C)fact that the line of credit is a secured loan and the revolving credit arrangement is unsecured.
• D)fact that the line of credit is an unsecured loan and the revolving credit arrangement is secured.
• E)fact that the revolving credit arrangement requires a cleanup period but the line of credit does not.

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Definitions:

Slide

An error in which the entire number is moved one or more spaces to the right or the left, such as writing $542.00 as $54.20 or $5,420.00.

Accounting Equation

A fundamental principle of accounting expressing the relationship between assets, liabilities, and equity.

Decreases

A reduction in the size, quantity, or importance of something.

Posting

The process of recording financial transactions in the ledger of an accounting system, an essential step in the accounting cycle.