Identify a true statement about long-term loans.Multiple choice question.The debt incurred is usually repaid according to a floating interest rather than a fixed interest.These loans can make funds available for up to two years.The principal can sometimes start being repaid in the second or third year of the loan, with only interest paid the first year.These loans are often used for seasonal financing and for building up inventories.

In relation to long-term financing, an amortised loan involves:Question 2Select one:a.periodic payments principal and interest repaid at maturity.b.periodic interest and principal repayments when positive cash flows begin.c.periodic interest payments and principal repaid at maturity.d.periodic equal repayments of interest and principal throughout the term.

Identify a true statement about lines of credit financing.Multiple choice question.The loans are usually for 30 to 40 days.The loan must be repaid or reduced to a certain agreed-upon level on a periodic basis.The loans are usually available only to strong, mature companies.The company does not need to pay any fee to ensure that the commercial bank will make the loan when requested.

Much long-term debt takes the form of _________, which are debt instruments that larger companies sell to raise long-term funds.Multiple Choicebondslong-term liabilitiesfixed assetslines of credit

An accurate statement about installment loans is that these Blank______.Multiple choice question.loans are usually for more than 1 yearshort-term funds are inadequate when seasonal financing is neededshort-term funds are frequently used to cover working capital needs for a period of timeloans require a major collateral

How should repayment of a long-term loan comprising repayment of the principal amount and interest due to date on the loan be treated in a statement of cash flow?a.The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment belongs in the “operating activities” section (because IAS 7 does not permit any alternatives in case of interest payments).b.The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment belongs either in the “operating activities” section or the “investing activities” section.c.The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment belongs either in the “operating activities” section or the “financing activities” section.d.The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment should be netted against interest received on bank deposits, and the net amount of interest should be disclosed in the “operating activities” section.