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

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

What is the main financial benefit of paying cash for a car instead of financing it with a loan?

Increasing your credit card balance

Avoiding interest expenses associated with the loan

Reducing the resale value of the car

Qualifying for higher insurance premiums

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Verified step by step guidance

Understand the concept of interest expenses: When you finance a car with a loan, you typically pay interest on the borrowed amount over the loan term. This interest represents an additional cost beyond the car's purchase price.

Compare cash payment versus financing: Paying cash for a car means you avoid borrowing money and, therefore, do not incur interest expenses. Financing, on the other hand, involves repaying the loan principal plus interest over time.

Analyze the financial benefit: By avoiding interest expenses, you save money that would otherwise be paid to the lender. This is the main financial advantage of paying cash for a car.

Evaluate the other options provided: Increasing your credit card balance, reducing the resale value of the car, and qualifying for higher insurance premiums are not directly related to the financial benefit of paying cash for a car. These options are either irrelevant or incorrect in this context.

Conclude the reasoning: The correct answer is 'Avoiding interest expenses associated with the loan,' as this directly addresses the financial benefit of paying cash for a car instead of financing it.