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

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Secured loans are less costly than unsecured loans because:

They have higher interest rates to compensate for risk.

They are backed by collateral, reducing the lender's risk.

They are only available to individuals with poor credit.

They require no documentation or credit checks.

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Verified step by step guidance

Understand the concept of secured loans: Secured loans are loans backed by collateral, which is an asset pledged by the borrower to the lender. This collateral reduces the lender's risk because, in case of default, the lender can seize the collateral to recover the loan amount.

Compare secured loans to unsecured loans: Unsecured loans do not require collateral, making them riskier for lenders. As a result, unsecured loans typically have higher interest rates to compensate for the increased risk.

Analyze the cost difference: Secured loans are less costly because the collateral reduces the lender's risk, allowing them to offer lower interest rates compared to unsecured loans.

Evaluate the incorrect options: Secured loans do not have higher interest rates (this applies to unsecured loans), are not exclusively available to individuals with poor credit, and do require documentation and credit checks to assess the borrower's ability to repay.

Conclude why secured loans are less costly: The presence of collateral is the key factor that reduces the lender's risk, making secured loans less expensive for borrowers.