Operating and Financial Constraints Placed on a Corporation by Loan

question 80

Multiple Choice

Operating and financial constraints placed on a corporation by loan provision are ________.

• A) agency costs to lenders
• B) agency costs to a firm
• C) necessary to regulate ownership of a firm
• D) necessary to control the risk of a firm

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Definitions:

Write-Down

An accounting practice of reducing the book value of an asset because it's overvalued compared to the market value.

Financial Statements

Compiled reports detailing the financial position, performance, and cash flows of a business over a specific period.

Beginning Inventory

The value of inventory held by a company at the start of an accounting period, used in calculating cost of goods sold.

Ending Inventory

The cumulative worth of merchandise ready to be sold at the conclusion of a financial period.