Why is interest paid on amounts borrowed from banks and other lenders considered to be anoperating activity while the amounts borrowed are financing activities?

Q: HOW DOES INTEREST RATE AFFECT THE FINANCIAL MARKET AND FINANCIAL INSTITUTIONS

A: Interest rate is the rate of interest which is charged on borrowings in the economy.

Q: What are the primary tools, and how are they used by lenders when determining whether they will lend…

A: The five C's of credit is a system used by lenders to gauge the credit worthiness of potential…

Q: Explain the possible IFRS treatment of bank loans.

A: IFRS is international finance reporting standards will replace with Accounting standards 39.

Q: Why is issuing a short-term note receivable an investing activity if it's short term and not long…

A: Short term note receivable are the notes that have maturity period of less than 12 months. Long term…

Q: For a creditor; how is a loan impairment recorded?

A: Creditors:   They are the outside entities to whom the business owes money for any product or a…

Q: are payments and receipts of interest classified as operating activities rather than as financing or…

A:

Q: Bank loans often are arranged under existing lines of credit. What is a line of credit? How does a…

A: LiabilitiesLiabilities are referred to as the obligations of the business towards the creditors for…

Q: How long-term deposit accounts benefit borrowers

A: A deposit account is an account that is held by the customers of a bank and financial institutions…

Q: Match the type of bank income (revenue) with the associated source. Revenue received from wealth…

A: Interest Income: It is the main source of Income for banks and financial institution, interest…

Q: What are the primary tools, and how are they used by lenders when determining whether they will lend…

A: Introduction : The given question relates to the concept of creditworthiness. The creditworthiness…

Q: Accounts receivable are financial assets under the category Loans and Receivables that are measured…

A: Solution: As per IAS, Loans and receivables are financial assets that are measured at amortized…

Q: What are lines of credit? From the viewpoint of a short-term creditor, why do lines of credit…

A: Financial statements: Financial statements are condensed summary of transactions communicated in the…

Q: what the effect to asset, liability and owner's equity if the company receives cash from a bank loan

A: The accounting equation states that assets equals to sum of liabilities and shareholders equity.

Q: effect to asset, liability and owner's equity if the company repays the bank loan

A: Bank loan is the amount borrowed from the bank. Upon repayment of bank loan, the bank loan account…

Q: Could you explain the relationship between money, credit, and financial institutions

A: Money is the center of the universe. Money is being used to buy and sell goods and services..…

Q: Why is it necessary for the bank to have the right to assign a mortgage to a third party (for…

A: Assignment of mortgage to a third party :  It is referred to as an agreement in loan obligations are…

Q: Given a financial institution that make money in three ways: interest income, interest income, and…

A: Banks and Financial institutions make most of their money from loaning and re-loaning money. Low…

Q: What are the advantages and disadvantages of financing assets through loans

A: Resource account is that the act of utilizing Associate in Nursing organization's financial record…

Q: Explain Issuance of loans to unworthy entities with examples

A: Issuance of loan to unworthy entities means granting of loans to the entities having a poor…

Q: Why must a balance sheet always balance? What are the major assets and claims on a commercial bank’s…

A: Balance sheet is called as statement of assets and liabilities. Liabilities represent claims of the…

Q: Why is it advantageous for a company to finance its receivables?

A: Accounts receivable is the amount due to a firm for the use of goods and services but not yet paid…

Q: How commercial loans and mortgages are structured in terms ofinterest and principal payments.

A: Commercial loan, as well as a mortgage, are being structured in terms of interest and principal…

Q: In the case of a bank's accrued interest ?revenues, which occurs first Earning The Interest Revenues…

A: Accrued Interest Revenue implies the interest revenue that has been earned but not yet received. It…

Q: Differentiate between the use of receivables in financing arrangements accountedfor as a secured…

A: Meaning of Financing with Receivable Financing receivable is refer as the arrangement in which…

Q: Why aren’t transactions involving accounts payable considered to be financing activities?

A: Answer: Accounts payable is current liability which is used in computing working capital, excess of…

Q: How important is the ability to borrow money from an individual and what is the primary risk of…

A: Borrowing money is the act of obtaining money from the lender in order to fulfill a financial goal…

Q: If a person charges interest on a loan transaction equivalent to the inflation rate than will it be…

A: Time value of the money is the value of the money which a person must use in order to know how much…

Q: Describe the nature of the basic services of financial institutions.

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: How are refundable deposits and customer advances similar? How do they differ?

A: Refundable Deposits: Refundable deposits are that money in advance offered by the customer. It is a…

Q: How do legal considerations affect a firm’s credit policy?

A: Four elements of credit policies are as follows: 1) Cash discount 2) Credit period 3) Credit…

Q: Examine the role of bank credit in financing of working capital. What are the types of bank credit?

A: In order to conduct the business activity successfully funds are required, these funds are invested…

Q: Due to banks Deposits from customers Other liabilities Subordinated debt Taxation classify it into…

A: current liabilities - current liabilities should be repaid by the company within one year. examples…

Q: is purchashing something on credit an operating activity or a financial activity

A: Assuming that purchase of something as the purchase of inventory.

Q: "Describe what a line of credit involves, and explain the legal obligation of a bank to provide…

A: Line of credit is the understanding between the banks and its customers that defines the maximum…

Q: An investment made in a fixed asset is similar to an investment made by a bank when it lends money.…

A: Fixed asset: Fixed asset is a long-period section of an asset or property that an entity has and…