A Lender May Limit the Ability of a Company to Pay

question 99

Multiple Choice

A lender may limit the ability of a company to pay future dividends in order to ensure that loan proceeds are used for purposes that will increase the company's profits and ability to repay the loans.Which of the following statements is true in this regard?

• A)The circumstance described in the statement is an example of a loan covenant.
• B)The lender may require instant repayment of debt if the loan proceeds are instead used to finance the payment of dividends.
• C)Such restrictions must be reported in the notes to the financial statements.
• D)All of the answers are acceptable.

---

Definitions:

Argument

In programming and logic, an argument is a value that is passed to a function, procedure, or command.

Active Cell

In spreadsheet software, the cell in which data is entered or active at any given time, usually highlighted or indicated by a border.

Page Layout

The arrangement of visual elements on a page, such as text, images, and shapes, designed to convey a specific aesthetic or functional message.

View

In computing, this term refers to the way in which information is displayed or rendered on the screen, often customizable by the user.