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

Why would your credit provider assign you a credit limit?

To ensure you always pay your balance in full each month.

To automatically approve all your future credit applications.

To increase the interest rate on your account.

To manage the risk of lending by limiting the maximum amount you can borrow.

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Verified step by step guidance

Understand the concept of a credit limit: A credit limit is the maximum amount of credit a lender allows a borrower to use on a credit account. It is a tool used by lenders to manage risk and ensure responsible borrowing.

Recognize the purpose of assigning a credit limit: Credit providers assign a credit limit to control the amount of money a borrower can access, reducing the risk of default and ensuring the borrower does not exceed their ability to repay.

Eliminate incorrect options: Review the provided options and identify why they are not correct. For example, assigning a credit limit is not directly related to ensuring full payment each month, approving future applications, or increasing interest rates.

Focus on the correct reasoning: The correct answer is that credit limits are assigned to manage the risk of lending by limiting the maximum amount a borrower can access. This protects both the lender and the borrower.

Apply this understanding to real-world scenarios: Consider how credit limits impact financial decisions, such as budgeting and borrowing responsibly, and how they help lenders maintain financial stability.