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

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Why do some lenders require borrowers to secure credit with collateral?

To ensure the borrower pays taxes on time

To reduce the lender's risk in case the borrower defaults on the loan

To increase the interest rate charged to the borrower

To allow the borrower to avoid making monthly payments

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Verified step by step guidance

Understand the concept of collateral: Collateral is an asset that a borrower offers to a lender as security for a loan. If the borrower fails to repay the loan, the lender can seize the collateral to recover the loan amount.

Identify the purpose of collateral: The primary purpose of requiring collateral is to reduce the lender's risk. It provides a safety net for the lender in case the borrower defaults on the loan.

Analyze the options provided: Evaluate each option to determine which aligns with the purpose of collateral. For example, ensuring tax payments or increasing interest rates are not directly related to the function of collateral.

Focus on the correct reasoning: The correct answer is that collateral reduces the lender's risk in case of default. This is because the lender can sell the collateral to recover the loan amount.

Conclude with the correct understanding: Collateral is a risk management tool for lenders, ensuring they have a way to recover their funds if the borrower cannot fulfill their repayment obligations.