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.