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

Which of the following best describes an uncollateralized loan?

A loan that requires a co-signer to guarantee repayment.

A loan that is secured by the borrower's inventory.

A loan that is only available to government entities.

A loan that is not backed by any specific asset as security.

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Verified step by step guidance

Understand the concept of an uncollateralized loan: It is a type of loan that does not require the borrower to pledge any specific asset as security for repayment. This contrasts with a collateralized loan, where assets such as property or inventory are used as collateral.

Review the options provided in the question to identify which one aligns with the definition of an uncollateralized loan.

Option 1: 'A loan that requires a co-signer to guarantee repayment' - This describes a loan that relies on a co-signer's guarantee, not the absence of collateral. It is not the correct description of an uncollateralized loan.

Option 2: 'A loan that is secured by the borrower's inventory' - This describes a collateralized loan, as the inventory serves as security. It is not the correct description of an uncollateralized loan.

Option 3: 'A loan that is not backed by any specific asset as security' - This matches the definition of an uncollateralized loan, as it is not secured by any asset. This is the correct answer.