Answer Key

Credits – Practice 1

Choose the correct answer:
  1. A contract detailing the terms of a promise by one party (the maker) to pay a sum of money to the other (the payee) is [a promissory note]
  2. A type of short-term loan, typically taken out for a period of 2 weeks to 3 years pending the arrangement of larger or longer-term financing is called  [a bridging loan]
  3. A binding document that a buyer can request from his bank in order to guarantee that the payment for goods will be transferred to the seller is  [a letter of credit]
  4. The total amount you owe on a particular debt is  [outstanding balance]
  5. An amount of a loan that remains to be paid is called  [outstanding balance]
  6. When you have taken more money out of your account than you had in it, the account is [overdrawn]
  7. The person or organization which extends credit to others is  [a creditor]
  8. The person who guarantees an obligation and has a legal duty to fulfill it is  [aguarantor]
  9. Taxpayers must pay a(n)  [amount due] when the total tax is greater than their total tax payments.
  10. The portion of receivables that can no longer be collected, typically from accounts receivable or loans is called [bad debt]