match the correct term for each of the following descriptions. Descriptions Terms Examples of these instruments include trade credit, accruals, short-term bank loans, and commercial paper. Accruals A document that provides evidence of the existence of a debt, and specifies the terms of the loan transaction. Blanket lien The cost of accounts payable paid before the expiration of the discount period. Commercial paper This financial instrument uses a borrowing firm’s entire inventory of low-priced, fast selling, and fungible products to secure a short-term loan, and allows the borrower to sell items from inventory without the lender’s permission. Commitment fee A fee charged by a financial institution providing a guaranteed, or revolving, line of credit, on the unused balance of a revolving line of credit. Discount interest loan A form of unsecured short-term financing used by large, extremely creditworthy business organizations. Factoring A financial transaction in which a firm sells its accounts receivable to a third party at a discount from their face value, and recourse is transferred to the purchaser. Free trade credit The rate of interest charged by banks on large loans made to their most creditworthy short-term business borrowers. Prime rate Short-term obligations, such as wages and payroll taxes, that have been incurred and are due to be paid in the near future. Promissory note A loan in which the interest is paid at the beginning of the loan period

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

match the correct term for each of the following descriptions.

Descriptions	Terms
Examples of these instruments include trade credit, accruals, short-term bank loans, and commercial paper.	Accruals
A document that provides evidence of the existence of a debt, and specifies the terms of the loan transaction.	Blanket lien
The cost of accounts payable paid before the expiration of the discount period.	Commercial paper
This financial instrument uses a borrowing firm’s entire inventory of low-priced, fast selling, and fungible products to secure a short-term loan, and allows the borrower to sell items from inventory without the lender’s permission.	Commitment fee
A fee charged by a financial institution providing a guaranteed, or revolving, line of credit, on the unused balance of a revolving line of credit.	Discount interest loan
A form of unsecured short-term financing used by large, extremely creditworthy business organizations.	Factoring
A financial transaction in which a firm sells its accounts receivable to a third party at a discount from their face value, and recourse is transferred to the purchaser.	Free trade credit
The rate of interest charged by banks on large loans made to their most creditworthy short-term business borrowers.	Prime rate
Short-term obligations, such as wages and payroll taxes, that have been incurred and are due to be paid in the near future.	Promissory note
A loan in which the interest is paid at the beginning of the loan period.	Short-term credit

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions