Many Think That Perhaps the Greatest Disadvantage of Using Credit

question 39

Multiple Choice

Many think that perhaps the greatest disadvantage of using credit is

• A) The temptation to overspend.
• B) The convenience offered instead of using cash.
• C) The float from using credit.
• D) The increase in total purchasing power.
• E) The increased satisfaction during present and future income periods.

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Definitions:

Fair Value Accounting

is a financial reporting approach where companies value their assets and liabilities at estimates of their current market prices.

GAAP

Generally Accepted Accounting Principles, which are standards and procedures companies follow in preparing financial statements.

Valuation Allowance Accounts

Accounts used to reduce the carrying value of assets to an amount that approximates their fair value, especially when it is impossible to realize the entry value.

Balance Sheet Accounts

Financial accounts that are reported in the balance sheet, including assets, liabilities, and equity accounts, representing a company's financial position at a specific point in time.