Multiple Choice
Which of the following best describes the central idea of Management by Objectives (MBO) in the context of accounting?
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
Which type of credit is described as one where the lender does not require the borrower to provide a security deposit or collateral?
A
Installment credit
B
Unsecured credit
C
Secured credit
D
Revolving credit
Verified step by step guidance1
Understand the concept of unsecured credit: Unsecured credit is a type of loan or credit where the lender does not require the borrower to provide collateral or a security deposit. This means the loan is granted based on the borrower's creditworthiness rather than any physical asset.
Compare unsecured credit with secured credit: Secured credit requires the borrower to provide collateral, such as a car or house, which the lender can claim if the borrower fails to repay the loan. Unsecured credit does not involve such collateral.
Analyze installment credit: Installment credit involves borrowing a fixed amount and repaying it in regular installments over a specified period. It can be either secured or unsecured, depending on the agreement.
Examine revolving credit: Revolving credit allows the borrower to access funds up to a certain limit and repay them flexibly, often with the option to borrow again. It can also be secured or unsecured.
Conclude that the correct answer is unsecured credit, as it specifically refers to loans or credit without the requirement of collateral or a security deposit.
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