When Trying to Assess the Credit Standing of a Customer

question 39

Multiple Choice

When trying to assess the credit standing of a customer, a financial analyst could use which of the following sources?

• A)Credit ratings and reports from credit agencies.
• B)Financial statements of the credit applicant.
• C)Other suppliers.
• D)All of the above.

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Definitions:

Journal Entries

Journal entries are the foundational recordings of all financial transactions in the double-entry bookkeeping system, indicating debits and credits to accounts.

Normal Balance

The side (debit or credit) of an accounting ledger where increases are recorded, reflecting the natural balance of an account.

Financial Statement

A formal record of a company's financial activities, including the income statement, balance sheet, and cash flow statement.

Permanent/Temporary

Describing the duration of accounts or conditions; permanent refers to longstanding or indefinite, while temporary implies a limited or specific time frame.