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Indicate Whether Each of the Following Statements About Lines of Credit

Question 70

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Indicate whether each of the following statements about lines of credit is true or false.

Premises:
The expense recognition for the payment of monthly interest is an asset exchange
Interest rates on line-of-credit agreements are often pegged to the consumer price index.
Line-of-credit agreements generally involve a fluctuating rate of interest.
A line-of-credit agreement allows a company to borrow on an as-needed basis.
The signing of a line-of-credit agreement is an asset source transaction.
Responses:
False
True

Correct Answer:

The expense recognition for the payment of monthly interest is an asset exchange
Interest rates on line-of-credit agreements are often pegged to the consumer price index.
Line-of-credit agreements generally involve a fluctuating rate of interest.
A line-of-credit agreement allows a company to borrow on an as-needed basis.
The signing of a line-of-credit agreement is an asset source transaction.
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