1) To be very flexible with borrowing, a company will apply for a:

A. revolving line of credit

B. short-term debt

C. long-term debt

D. working capital loan

E. contra liability

2) A formal promise to pay a stated amount at a stated date, usually with interest at a stated rate and sometimes secured by collateral is called:

A. note payable

B. revolving line of credit

C. long-term debt

D. working capital loan

E. prime rate

3) Prime plus 2 is a:

A. Oconstant rate

B. fixed rate

C. discount basis

D. changing rate

E. indeterminable rate

4) The following item is not a part of current liabilities:

A. accounts payable

B. short-term debt

C. long-term debt

D. current maturities of long-term debt E. other accrued liabilities

5) A long-term loan is recorded in the following way:

A. interest expense debits, short-term loan credits

B. cash debits, long-term debt credits C. cash debits, interest expense credits D. short-term debt debits, cash credits E. long-term debt debits, cash credits

6) Current maturities of long-debt (reclassification) is recorded in the following way:

A. current maturities of long-term debt debits, long-term debt credits

B. cash debits, interest expense credits C. cash debits, long-term debt credits D. cash debits, short-term debt credits E. long-term debt debits, current maturities of long-term debt credits

7) Collecting cash in advance of earning the related revenue records is called:

A. unearned revenue

B. prime rate

C. working capital loan

D. note payable

E. revolving line of credit

8) If market interest rate is higher than a bond's stated interest rate, the bond will trade:

A. at a premium

B. at prime rate

C. at face value

D. at par value

E. at a discount

9) The use of financial leverage usually results in a difference between:

A. short-term debt and long-term debt B. LIFO and FIFO method working

C. capital and non-working capital

D. ROI and ROE

E. prime rate and interest rate

10) A bond that is repaid in installments is called:

A. term bond

B. convertible bond

C. callable bond

D. registered bond

E. debenture bond

F. Ocoupon bond

G. serial bond