Difference between nominal rate of interest and effective rate of interest is given below: Nominal rate of interest: Nominal rate is an annual rate. The nominal rate of interest is calculated by annually. Does not…

Trade Credit – An arrangement to buy goods or services on the account without making immediate cash payment. For many businesses, trade credit is an essential tool for financing growth. Trade credit is the credit extended…

Commercial paper is a money-market security issued (sold) by large corporations to obtain funds to meet short-term debt obligations (for example, payroll), and is backed only by an issuing bank or corporation’s promise to pay…

Compensating Balance The financial accounting term restricted cash and compensating balances refers to monies that are reserved and not generally available to the company. Restricted cash can include minimum balances on bank accounts while compensating…

Lines of credit and revolving credit are quite similar. These loan products are especially helpful for those building homes, remodeling, and paying off other debts. While the terms of these products can be quite varied,…

Trade Credit is an interim debt arising from credit sales and recorded as an account receivable by the seller and as an account payable by the buyers. Types of trade credit: Open Account: In this…