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

Which of the following statements is correct about secured loans?

Secured loans cannot be reported on the balance sheet.

Secured loans do not require any collateral from the borrower.

Secured loans are always classified as current liabilities.

Secured loans are backed by specific assets that serve as collateral.

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Verified step by step guidance

Understand the concept of secured loans: Secured loans are loans that are backed by specific assets, known as collateral, which the lender can claim if the borrower fails to repay the loan.

Clarify why secured loans are reported on the balance sheet: Secured loans are liabilities and must be reported on the balance sheet under either current liabilities or non-current liabilities, depending on the repayment terms.

Explain the role of collateral: Collateral is a tangible or intangible asset pledged by the borrower to secure the loan. This ensures the lender has a claim to the asset in case of default.

Discuss the classification of secured loans: Secured loans are not always classified as current liabilities. They can be classified as non-current liabilities if the repayment period exceeds one year.

Conclude with the correct statement: Secured loans are backed by specific assets that serve as collateral, making this the correct answer among the options provided.