Chapter 13 Questions to review 13-1. 1) Are probable future sacrifices of economic benefits. 2) Arise from present obligations (to transfer goods or provide services) to other entities. 3) Result from past transactions or events. 13-2. Current liabilities are expected to require current assets and usually are payable within one year. Long term liabilities are all other liabilities not reaching these guidelines. 13-4. A line of credit allows a company to borrow cash w/out having to follow formal loan procedures and paperwork. A noncommitted line of credit is an informal agreement that permits a company to borrow up to a prearranged limit w/out having to follow formal loan procedures. A committed line of credit is a more formal agreement that usually requires the company to pay a committed fee to the bank. 13-5. No bank will ever give a loan for free. They do bear interest but the interest is deducted (or discounted) from the face amount to determine the cash proceeds. 13-6. Commercial paper refers to unsecured notes sold in minimum denominations of $25,000
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