Which of the following statements regarding lines of credit is FALSE?
A)The line of credit agreement may also stipulate that at some point in time the outstanding balance must be zero.This policy ensures that the firm does not use the short-term financing to finance its long-term obligations.
B)A revolving line of credit is an uncommitted line of credit that involves an informal agreement from the bank for a longer period of time,typically two to three years.
C)The line of credit may be uncommitted,meaning it is an informal agreement that does not legally bind the bank to provide the funds.
D)A revolving line of credit with no fixed maturity is called evergreen credit.

Question

Quizplus · Accepted Answer

A revolving line of credit is actually a committed line of credit, meaning the bank has made a formal commitment to provide funds for a specified period of time. An uncommitted line of credit is one that does not have a formal agreement and is often used for short-term needs.

Which of the Following Statements Regarding Lines of Credit Is