Match Each Definition with the Correct Term Below

question 109

Multiple Choice

Match each definition with the correct term below.
-Compensating balance

• A)One way to control a cash fund and cash advances.
• B)A minimum amount that a bank requires a company to keep in its bank account as part of a credit-granting arrangement.
• C)The method of estimating uncollectible accounts that calculates the Uncollectible Accounts Expense.
• D)The process of accounting for the difference between the balance on a company's bank statement and the balance in its Cash account.
• E)The total proceeds of a promissory note.
• F)An unconditional promise to pay a definite sum of money on demand or at a future date.
• G)The method of accounting for uncollectible accounts that matches bad debts against the sales they help produce.
• H)Short-term financial assets that arise from credit sales made in the ordinary course of doing business.
• I)A method of conducting business transactions that does not involve the actual transfer of cash.
• J)The cost of borrowing money or the return on lending money.
• K)A potential liability that can develop into a real liability if a particular event occurs.
• L)The method of estimating uncollectible accounts that calculates the targeted balance of Allowance for Uncollectible Accounts.

---

Definitions:

Prepaid Property Tax

An expense that has been paid in advance for property taxes, recognized as a current asset until the period it covers arrives.

Bonds

Fixed income investments representing a loan made by an investor to a borrower, often corporate or governmental, which pays periodic interest payments.

Discount

A reduction from the full price or value of a good, service, or financial instrument.

Face Amount

The nominal value stated on the face of a financial instrument, such as a bond, that the issuer promises to pay at maturity.