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

Which of the following is true regarding blanket inventory liens?

They are used exclusively for intangible assets such as patents and trademarks.

They only cover specific items of inventory listed in the loan agreement.

They do not require any filing or public notice to be enforceable.

They give the lender a security interest in all inventory owned by the borrower.

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Verified step by step guidance

Understand the concept of a blanket inventory lien: A blanket inventory lien is a type of security interest that gives the lender rights to all inventory owned by the borrower as collateral for a loan.

Clarify the incorrect options: Review each statement provided in the question and identify why it is incorrect. For example, blanket inventory liens are not exclusive to intangible assets, nor do they cover only specific items of inventory listed in the loan agreement.

Explain the requirement for enforceability: Blanket inventory liens typically require filing or public notice to be enforceable under the Uniform Commercial Code (UCC). This ensures that other creditors are aware of the lien.

Focus on the correct statement: The correct answer is that blanket inventory liens give the lender a security interest in all inventory owned by the borrower. This means the lender can claim all inventory as collateral if the borrower defaults on the loan.

Summarize the key takeaway: Blanket inventory liens are a broad form of security interest that applies to all inventory owned by the borrower, making them a powerful tool for lenders in securing loans.