To Ensure an Unsecured Line of Credit Is Used Solely

question 39

Multiple Choice

To ensure an unsecured line of credit is used solely for short-term purposes, the loan arrangement frequently includes which one of the following?

• A)Cleanup period
• B)Grace period
• C)Revolver
• D)Factoring arrangement
• E)Lien on the borrower's inventory

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Definitions:

Telephone Bill

A telephone bill is a periodic charge levied on individuals or businesses for the use of telecommunication services.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, leading to net profit or loss.

Balance Sheet

A financial statement that provides a snapshot of a company’s financial position, listing assets, liabilities, and owner’s equity at a specific point in time.