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

When issuing a working capital loan, how do lenders typically expect to be repaid?

By selling the borrower's long-term fixed assets

By refinancing the loan with another long-term loan

From the borrower's short-term operating cash flows, such as accounts receivable and inventory sales

Through the issuance of new equity shares by the borrower

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Verified step by step guidance

Understand the concept of a working capital loan: A working capital loan is typically used to finance a company's short-term operational needs, such as paying for inventory, accounts payable, or other day-to-day expenses.

Recognize the repayment expectation: Lenders generally expect repayment of working capital loans from the borrower's short-term operating cash flows. These cash flows are generated from activities like accounts receivable collections and inventory sales.

Eliminate incorrect repayment methods: Selling long-term fixed assets or issuing new equity shares are not typical repayment methods for working capital loans, as these are not directly tied to short-term operational cash flows.

Consider refinancing: While refinancing with another long-term loan could be a possibility, it is not the primary expectation for repayment of a working capital loan. The focus remains on short-term cash flows.

Conclude the repayment method: The correct repayment method aligns with the nature of the loan, which is short-term. Therefore, repayment is expected from the borrower's short-term operating cash flows, such as accounts receivable and inventory sales.