IBM Funding a Business

Background checks for credit/loans are required because

• They show the history of the businesses ability to pay back loans

• Show if a business has been in financial debt in the past

• provide a business with a credit rating

• all of the above

The major responsibilities involved in financial accounting are the preparation of the:

• statutory license, social audit report, and journal ledger

• balance sheet, income statement, and statement of cash flows.

• articles of incorporation, auditor's report, and master budget

• Company strategies, master budget, income statment

The the context of financial statements, the statement of cash flows shows:

• The record of cash going in and out of the business

• The amount of revenue the business is getting

• How much interest they are paying on debts and liabilities

• If the business is profitable or not

_____ is the functional area of business that is responsible for finding the best sources of funds and the best ways to use them

• Marketing

• Production

• Operation

• Finance

_____ is one of the most important sources of short-term financing for many firms and arises when suppliers ship materials, parts, or goods to a firm without requiring payment at the time of delivery

• Working captial

• Corporate Bond

• Commercial Papers

• Trade Credit

A(n) _____ is a company that provides short-term financing to firms by purchasing their right to collect from people that owe them at a discount

• Subsidiary

• Monopoly

• Factor

• Limited Liability Company

When a firm negotiates a loan with a bank, it signs a(n) _____, which specifies the length of the loan, the rate of interest the firm must pay, and other terms and conditions of the loan

• Promissory Note

• Treasury Bill

• Corporate Bond

• Covenant

A _____ is a long term (multi-year) financial arrangement in which a bank agrees to provide a firm with funds up to some specified limit, as long as the borrower's financial situation does not deteriorate, and the bank has sufficient funds

• Term Loan

• Corporate Bond

• Promissory Note

• Line of Credit

_____ are the part of a firm's net income it reinvests into the company

• Counter credits

• Retained Earnings

• Cash Dividends

• Net Liabilities

A(n) _____ is a restriction lenders impose on borrowers as a condition of providing long-term debt financing

• Consol

• Covenant

• Equity

• Promissory Note