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

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

Credit isn't a wealth-building tool; it's a business that makes money for which of the following parties?

Government agencies

Borrowers

Non-profit organizations

Lenders and financial institutions

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Verified step by step guidance

Understand the concept of credit: Credit is a financial arrangement where a borrower receives funds or goods with the promise to repay at a later date, often with interest. It is a tool used by lenders and financial institutions to generate revenue.

Identify the parties involved in credit transactions: The key players are lenders (such as banks and financial institutions), borrowers (individuals or businesses), and sometimes government agencies or non-profit organizations in specific contexts.

Analyze how lenders and financial institutions make money: Lenders charge interest on the borrowed amount, fees for services, and penalties for late payments. These charges are the primary sources of income for lenders.

Evaluate why other parties listed in the question do not primarily profit from credit: Government agencies may regulate credit but do not typically profit from it. Borrowers use credit but do not earn money from it. Non-profit organizations may offer financial education or assistance but are not profit-driven entities.

Conclude that lenders and financial institutions are the correct answer: They are the entities that profit from credit through interest, fees, and penalties, making it a business model for them.