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

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which of the following is a benefit of borrowing money to start a business?

It ensures that no interest expenses will be incurred.

It guarantees that the business will be profitable.

It allows the owner to retain full ownership while accessing needed capital.

It eliminates all financial risk for the owner.

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Verified step by step guidance

Understand the concept of borrowing money to start a business. Borrowing involves obtaining funds from lenders, typically in the form of loans, which must be repaid with interest over time.

Evaluate the benefits of borrowing money. One key advantage is that it allows the business owner to access necessary capital without giving up equity or ownership in the business.

Analyze the incorrect options: (1) Borrowing does not eliminate interest expenses; in fact, interest is a cost of borrowing. (2) Borrowing does not guarantee profitability; profitability depends on the business's operations and market conditions. (3) Borrowing does not eliminate financial risk; the owner is still responsible for repaying the loan even if the business fails.

Focus on the correct option: Borrowing money enables the owner to retain full ownership of the business while gaining access to the funds needed to start or grow the business. This is a significant benefit compared to raising capital by selling equity, which involves sharing ownership.

Conclude that borrowing money is a strategic financial decision that allows the owner to maintain control of the business while addressing funding needs, but it comes with obligations such as interest payments and repayment of the principal amount.