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

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Long-term financing should be used to do which of the following?

Cover short-term cash shortages

Finance the purchase of fixed assets such as buildings and equipment

Settle accounts payable within 30 days

Pay for routine operating expenses

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Verified step by step guidance

Understand the concept of long-term financing: Long-term financing refers to funds borrowed or raised for a period longer than one year. It is typically used for significant investments that provide benefits over an extended period, such as purchasing fixed assets.

Analyze the options provided in the problem: Evaluate each option to determine whether it aligns with the purpose of long-term financing. For example, covering short-term cash shortages or settling accounts payable within 30 days are short-term needs and are typically addressed with short-term financing.

Focus on the correct use of long-term financing: Long-term financing is most appropriate for financing the purchase of fixed assets, such as buildings and equipment, because these assets are used over many years and require substantial capital.

Eliminate incorrect options: Routine operating expenses and short-term obligations like accounts payable are recurring and typically funded through short-term financing or operational cash flow, not long-term financing.

Conclude the reasoning: Based on the analysis, the correct use of long-term financing is to finance the purchase of fixed assets, as these align with the long-term nature of the funding and the extended benefit period of the assets.