A Company Which Foregoes the Discount When Credit Terms Are

question 18

Multiple Choice

A company which foregoes the discount when credit terms are 4/15 net 70 is essentially borrowing money from his supplier for an additional

• A) 40 days.
• B) 55 days.
• C) 70 days.
• D) 85 days.

---

Definitions:

Debt Restructuring

The process of renegotiating the terms of existing loans to provide a distressed borrower with relief, which may include reducing the interest rate, extending payment terms, or reducing the total amount owed.

Collateral

Assets pledged by a borrower to secure a loan or other credit, and subject to seizure in the event of default.

Installment Sales Contract

A sales agreement that allows the buyer to make payments over a period of time in exchange for goods or services.

Amortization Schedule

A table detailing each periodic payment on an amortizing loan (like a mortgage), showing the amount of each payment that goes towards principal and interest over the loan term.