Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

As a condition for a loan, a bank requires the borrower to provide collateral. What type of liability does this create for the borrower?

Unsecured liability

Deferred liability

Contingent liability

Secured liability

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Verified step by step guidance

Understand the concept of liabilities: A liability is an obligation that a company owes to external parties, typically arising from past transactions or events.

Learn about secured liabilities: A secured liability is a type of obligation where the borrower pledges an asset as collateral to secure the loan. If the borrower fails to repay, the lender can claim the collateral to recover the debt.

Compare secured liabilities with other types: Unsecured liabilities do not involve collateral, deferred liabilities are obligations that are postponed to a future date, and contingent liabilities depend on the occurrence of a specific event.

Analyze the problem: The bank requires the borrower to provide collateral for the loan. This means the loan is backed by an asset, which aligns with the definition of a secured liability.

Conclude that the correct type of liability created in this scenario is a secured liability, as the collateral ensures the lender has a claim on the asset in case of default.