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

Useful Information

Financial Accounting

1. Introduction to Accounting

Useful Information

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Multiple Choice

Why is it generally advised to avoid borrowing up to your credit limit on a credit card?

It can negatively impact your credit score due to a high credit utilization ratio.

It automatically increases your available credit limit.

It results in immediate forgiveness of your outstanding balance.

It guarantees a lower interest rate on future loans.

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Verified step by step guidance

Understand the concept of credit utilization ratio: This is the percentage of your available credit that you are using. It is calculated as (Total Credit Card Balance ÷ Total Credit Limit) × 100%. A high credit utilization ratio can negatively impact your credit score.

Recognize the impact on credit score: Credit utilization is a key factor in determining your credit score. Generally, it is advised to keep your utilization below 30% to maintain a healthy credit score.

Clarify why borrowing up to the credit limit is problematic: When you borrow up to your credit limit, your credit utilization ratio reaches 100%, which is considered very high and can signal financial distress to lenders and credit bureaus.

Debunk the incorrect options: Borrowing up to your credit limit does not automatically increase your available credit limit, result in forgiveness of your balance, or guarantee lower interest rates on future loans. These are misconceptions.

Conclude with best practices: To avoid negative impacts on your credit score, aim to use only a small portion of your available credit and pay off balances regularly to keep your utilization ratio low.