We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Difference between Line of Credit and Short-term Notes Payable Essay Sample

essay
The whole doc is available only for registered users OPEN DOC

A limited time offer!

Get a custom sample essay written according to your requirements urgent 3h delivery guaranteed

Order Now

Difference between Line of Credit and Short-term Notes Payable Essay Sample

A line of credit is the advancement of loan at any time for any purpose up to a certain limited amount.  A line of credit is also called a credit line or a credit limit. Lines of credit are normally an extension similar to a pre-established loan with a specific borrowing limit. This is usually extended by a lending institution or n individual.

The line of credit allows borrowers to obtain a number of loans without reapplying each time as long as the total borrowed funds when settled against the payments made do not exceed the credit limit. An example of a line of credit is a credit card where there is a dollar limit to the amount that can be borrowed to make purchases. This amount is not to be exceeded and payments can be made to an account to settle this credit. Some lines of credit require monthly payments of interests only while others might require some principle payments as well.

Short-term notes are a form of short term liability. They are usually used to secure bank loans, pay suppliers and obtain other types of credit. The interest charges on them are stated either separately on the face of the note or deducted in advance from the face value of the note. Short-term notes payable are interest-bearing debts that are accompanied by specific borrowing terms and conditions.  This is a written promise to pay a specified amount on a defined future date set within one fiscal year.

The difference between the line of credit and the short-term notes payable is that in line of credit an extension of the loan can be obtained. In short-term notes this is not possible, that is no additional advances can be made on the loan. Another characteristic of the short term notes payable is that it can be transferred from party to party by endorsement


Bibliography

  1. What is a Line of Credit, available at: http://www.wisegeek.com/what-is-a-line-of-credit.htm

We can write a custom essay

According to Your Specific Requirements

Order an essay
Get Access To The Full Essay
icon
300+
Materials Daily
icon
100,000+ Subjects
2000+ Topics
icon
Free Plagiarism
Checker
icon
All Materials
are Cataloged Well

Sorry, but copying text is forbidden on this website. If you need this or any other sample, we can send it to you via email.

By clicking "SEND", you agree to our terms of service and privacy policy. We'll occasionally send you account related and promo emails.
Sorry, but only registered users have full access

How about getting this access
immediately?

Become a member

Your Answer Is Very Helpful For Us
Thank You A Lot!

logo

Emma Taylor

online

Hi there!
Would you like to get such a paper?
How about getting a customized one?

Can't find What you were Looking for?

Get access to our huge, continuously updated knowledge base

The next update will be in:
14 : 59 : 59
Become a Member