An Off-Balance-Sheet Asset Is an Item That

question 75

Multiple Choice

An off-balance-sheet asset is an item that:

• A)moves on to the asset side of the balance sheet when a contingent event occurs
• B)is off the balance sheet as it is not part of the FI's core operations
• C)is off the balance sheet as the FI does not wish to reveal its existence
• D)is off the balance sheet as it neither has an impact on the risk or profitability of the FI

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Definitions:

Credit Period

The amount of time the buyer is allowed in which to pay the seller.

Credit Memo

A document issued by a seller to a buyer, reducing the amount the buyer owes to the seller under previous invoices.

Percent Of Cash Discount

The percentage reduction in price offered for prompt payment of invoices to encourage early settlement of accounts payable.

Normal Credit Balance

The expected or usual balance of a specific account, where liability, equity, and revenue accounts typically have credit balances.