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

What is the primary purpose of a lien when you obtain a secured loan?

To eliminate the need for a credit check

To give the lender a legal claim to the collateral if the borrower defaults

To increase the interest rate on the loan

To transfer ownership of the collateral to the borrower immediately

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Verified step by step guidance

Understand the concept of a lien: A lien is a legal claim or right against an asset that is used as collateral to secure a loan. It ensures that the lender has a legal claim to the collateral if the borrower fails to repay the loan.

Recognize the purpose of a secured loan: A secured loan is backed by collateral, which reduces the lender's risk. The lien is the mechanism that allows the lender to enforce their claim on the collateral.

Analyze the options provided in the question: Evaluate each option to determine which aligns with the purpose of a lien. For example, eliminating the need for a credit check is not related to the function of a lien.

Focus on the correct answer: The primary purpose of a lien is to give the lender a legal claim to the collateral if the borrower defaults. This ensures the lender can recover their losses by taking possession of the collateral.

Conclude by understanding the implications: A lien does not increase the interest rate, transfer ownership of the collateral immediately, or eliminate the need for a credit check. Its sole purpose is to protect the lender's interest in the event of default.