Ch. 18 Review

The interest rate charged to a bank’s most creditworthy customers.

• last year's interest rate

• Interest rate

• prime interest rate

• current interest rate

Expenses that are not related to a business’s normal operations.

• operating expenses

• non-operating expenses

• non-sales expenses

• not normal expenses

The payment of an operating expense necessary to earn revenue.

• revenue expenditure

• expense expenditure

• check payment

• credit payment

All bonds representing the total amount of a loan.

• IRA issue

• preferred stock

• bond issue

A long-term promise to pay a specified amount on a specified date and to pay interest at stated intervals.

• bond issue

• bond

• stock

• IRA

Assets pledged to a creditor to guarantee repayment of a loan.

• plant equipment

• capital

• interest

• collateral

Interest incurred on borrowed funds.

• interest expense

• interest loan

• interest leverage

• interest rate

Obtaining capital by borrowing money for a period of time.

• debt financing

• asset financing

• liability financing

• all 3 answers

The ability of a business to use borrowed funds to increase its earnings.

• financial leverage

• loan leverage

• borrowing leverage

A class of stock that gives preferred shareholders preference over common shareholders in dividends along with other rights.

• par value stock

• preferred stock

• preferred bond

• debt financing