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

Debt financing is essentially:

Raising capital by issuing shares of stock to investors

Selling company assets to generate cash

Using retained earnings to finance business operations

Obtaining funds by borrowing, creating a liability to be repaid in the future

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Verified step by step guidance

Understand the concept of debt financing: Debt financing refers to the process of raising capital by borrowing money, which creates a liability that the company must repay in the future, typically with interest.

Differentiate debt financing from other methods of raising capital: Unlike equity financing (issuing shares of stock to investors) or using retained earnings (profits reinvested into the business), debt financing involves borrowing funds from external sources such as banks, bondholders, or other lenders.

Recognize the key characteristics of debt financing: It creates a legal obligation for the company to repay the borrowed amount along with interest, and it does not dilute ownership of the company as equity financing does.

Identify examples of debt financing: Common examples include issuing bonds, obtaining loans from financial institutions, or using credit lines.

Understand the implications of debt financing: While it provides immediate access to funds, it increases the company's liabilities and financial risk due to the obligation to repay the debt regardless of business performance.