Restrictions Imposed by Loan Contracts on the Operations of a Business,such

question 84

Multiple Choice

Restrictions imposed by loan contracts on the operations of a business,such as requiring that a specific minimum net worth be maintained,a specific debt-to-equity ratio not be exceeded,no dividends be paid to stockholders and so on,are known as

• A)financial contracts.
• B)legal bonds.
• C)loan covenants.
• D)credit assurance.

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Definitions:

Aging

The process of categorizing accounts receivable based on the length of time an invoice has been outstanding.

Accounts Receivable

The total owed by customers for goods or services they've received from a company yet haven't paid for.

Bad Debts

Accounts receivable that a company does not expect to collect and writes off as a loss in its financial statements.

Balance Sheet Approach

A method for evaluating foreign subsidiaries in which assets and liabilities are translated at the current exchange rate, whereas equity accounts are translated at the historical exchange rates.