Types of Credit
What is the party called that receives credit?
debtors
T/F
annual percentage rate (APR) is the annual cost of credit charged by a lender.
True
Decribe cash flow
movement of money into and out of the business.
T/F
Customer Loyalty is a benefit of extending credit?
True
Who is consumer credit granted to?
Individual consumers
What is the term for this definition?
one formula used when calculating the cost of the loan
Simple Credit
what is the five C's of banking definition
criteria lenders use to evaluate the creditworthiness of business.
T/F
A list of individuals who owe money to the company is called accounts receivable aging report
False
What does a creditor do?
They lend the money
All of the following is taken into account when calculating the total amount paid except...
A. Length of payment
B. Amount of Credit Used
C. Place where Credit was used
D. Interest charged
C. Place where credit was used
Describe conditions
relate to the overall environment in which businesses operate.
What does a collection agency do?
Collect past due bills for a fee
The total amount payed by the borrower to the lender is called what?
Finance charge
What does APR include?
APR includes all fees and charges that otherwise may be hidden from the borrower.
Describe capital
the owners investment in the business.
Name a benefit of extending credit
generation of sales and/or customer loyalty
If you take on a loan for a specific amount of money with a specific amount of interest that is to be payed at a specific time, what kind of credit are you taking on?
Closed-end
What is the formula to calculate interest?
Principle x Rate x Time = Interest
If a business has a good record of paying off loans in time and has good credit history, then they pass which C of banking?
Capacity
What does an accounts receivable aging report show?
It shows when accounts receivables are due, as well as the length of time accounts have been outstanding.