Essentially increases the interest rate on money? borrowed

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Reference no: EM131863534

1. ?"A compensating balance essentially increases the interest rate on money? borrowed." Explain.

A.True. If a compensating balance is? required, a borrower pays a? one-time sum of up to? 10% of the loan balance.

B. True. If a compensating balance is? required, a borrower does not have use of the entire amount borrowed.

C. False. If a compensating balance is? required, a borrower does not have use of the entire amount borrowed.? However, the interest rate is only charge on the amount that is available.

D. False. If a compensating balance is? required, a borrower has use of the entire amount borrowed.? However, the interest rate is variable depending on the loan amount.

2. What is the? two-pronged test for revenue recognition under current U.S.? GAAP?

A. The? two-pronged test for revenue recognition? is: (1) the goods or services must be delivered to the? customer-that is, the company has received payment for the goods or? services, and? (2) the company must have received cash or an asset virtually assured of being converted into? cash-that is, the revenue must be realized or realizable.

B. The? two-pronged test for revenue recognition? is: (1) the goods or services must be delivered to the? customer-that is, the company has earned the? revenue, and? (2) the company must have received cash or an asset virtually assured of being converted into? cash-that is, the revenue must be realized or realizable.

C. The? two-pronged test for revenue recognition? is: (1) the goods or services must be delivered to the? customer-that is, the company has earned the? revenue, and? (2) the company must have received cash or an asset virtually assured of being converted into? cash-that is, the revenue be recorded in accounts receivable.

D. None of the above.

Reference no: EM131863534

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