Which of the Following Statements Is NOT True

question 39

Multiple Choice

Which of the following statements is NOT true?

• A) Accounts payable (trade credit), bank loans, and commercial paper are common sources of short-term financing.
• B) An informal line of credit is a verbal agreement between the firm and the bank, allowing the firm to borrow up to an agreed-upon limit.
• C) An informal line of credit is a special type of collateralized loan.
• D) A formal line of credit is also known as "revolving credit."

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Definitions:

Operating Expense

Operating expense refers to the costs associated with the day-to-day operations of a business, excluding direct production costs.

Investing Activity

Transactions involving the purchase and sale of long-term assets and other investments, not directly related to the entity's primary business operations.

Land

Land is a tangible asset representing a piece of earth's surface which is owned and has a specific value attached to it, often used for commercial or residential purposes.

Income Tax Expense

The total amount of income tax that a company calculates it owes for a specific period.