Although Short-Term Interest Rates Have Historically Averaged Less Than Long-Term

question 42

True/False

Although short-term interest rates have historically averaged less than long-term rates,the heavy use of short-term debt is considered to be an aggressive current asset financing strategy because of the inherent risks of using short-term financing.

---

Definitions:

Aging Of Receivables

A method used in accounting to estimate the amount of receivables that may not be collectible by categorizing them according to the length of time they have been outstanding.

Uncollectible

Refers to accounts receivable that are considered to be uncollectible and thus written off as a loss.

Adjusting Entry

A journal entry made prior to preparing financial statements to adjust the balances of accounts to accurately reflect the financial activity.

Adjusting Entry

A journal entry made in accounting records at the end of an accounting period to update the balances of certain accounts and reflect the true financial position of a business.