A Line of Credit Is a Short-Term Loan That Is

question 66

True/False

A line of credit is a short-term loan that is approved before the money is actually needed.

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Definitions:

Principal

The original sum of money borrowed in a loan, or the original amount invested, excluding any interest or dividends.

Accounts Receivable

Money owed to a business by its clients for goods or services delivered but for which payment has not yet been received.

Credit

An accounting entry that increases the balance of liabilities and equity accounts, and decreases the balance of assets accounts. It is also the provision of resources (such as money) by one party to another with the expectation of repayment.

Accrued Interest

Interest that has accumulated over a period but has not yet been paid or officially recorded.