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

When you use credit in a financial transaction, what are you creating?

A line of credit

Debt

A default

Collateral

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Verified step by step guidance

Understand the concept of 'credit' in financial transactions. Credit refers to the ability to borrow money or access goods or services with the agreement to pay later.

Recognize that when you use credit, you are essentially borrowing funds or resources, which creates an obligation to repay. This obligation is referred to as 'debt.'

Analyze the options provided in the question: 'A line of credit,' 'Debt,' 'A default,' and 'Collateral.'

Clarify the definitions of each term: A line of credit is a pre-approved borrowing limit, a default is the failure to repay debt, and collateral is an asset pledged as security for a loan. Debt, however, directly refers to the obligation created when credit is used.

Conclude that the correct answer is 'Debt,' as using credit creates a financial obligation to repay, which is classified as debt.