In Determining Whether a Debt Is a Business or Nonbusiness

question 41

True/False

In determining whether a debt is a business or nonbusiness bad debt, the debtor's use of the borrowed funds is not important.

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Definitions:

Cash Burn

The rate at which a company spends its cash reserves before generating positive cash flow.

Cash Equivalents

Highly liquid investments that are readily convertible to known amounts of cash and have an original maturity of three months or less.

Monthly Cash Expenses

The total amount of money spent by an individual or business in cash over the course of a month.

Compensating Balance

A minimum balance that a borrower must maintain in a bank account as a condition for getting a loan from that bank.