A Line of Credit Means

question 55

Multiple Choice

A line of credit means:

• A)the company has access to unlimited funds.
• B)a line of credit is the same as long-term loan.
• C)a line of credit remains active forever.
• D)None of the above

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Definitions:

Net Assets

The total assets of a company minus its total liabilities, indicating the company's underlying value.

Retained Earnings

The portion of a company's profits not distributed to shareholders as dividends but retained for reinvestment in the business or to pay off debt.

Amortized Cost Basis

An accounting method that gradually writes off the initial cost of an asset over a period, which reflects its consumption or use over time.

Credit Loss

Credit Loss is the loss incurred by a lender when a borrower fails to repay a loan, and the recoverable amount is less than the outstanding balance.