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

Which of the following is a primary concern for a bank when lending funds to a business for the short term?

The business's long-term capital structure

The business's dividend policy

The business's liquidity position

The business's market share growth

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Verified step by step guidance

Understand the context of the question: A bank lending funds to a business for the short term is primarily concerned with the business's ability to repay the loan within the short-term period. This is directly tied to the concept of liquidity.

Define liquidity: Liquidity refers to the ability of a business to meet its short-term obligations using its current assets, such as cash, accounts receivable, and inventory. A strong liquidity position indicates that the business can repay its debts promptly.

Analyze the options provided: Evaluate each option in the context of short-term lending. For example, long-term capital structure and dividend policy are more relevant to long-term financial planning, not short-term repayment ability. Market share growth is a strategic concern but does not directly impact short-term liquidity.

Focus on the correct answer: The business's liquidity position is the primary concern for a bank in short-term lending because it directly impacts the business's ability to repay the loan on time.

Conclude the reasoning: Banks assess liquidity through financial ratios such as the current ratio and quick ratio, which measure the relationship between current assets and current liabilities. This ensures the business has sufficient resources to cover short-term obligations.