ACTG 3120 Chapter Notes - Chapter 13: Income Statement, Call Option, Financial Statement

• School: York University
• Department: Accounting
• Course: ACTG 3120
• Professor: Elizabeth Farrell

Document Summary

Some purchases made by signing promissory notes that obligate the company to pay a supplier at or before a given date. Promissory notes are legally enforceable negotiable instruments. The notes may bear interest or they are non-interest-bearing. Notes used for trade purposes are most common in international trade because the financial institutions that act as intermediaries are better placed to enforce payment: short-term bank loans. Usually in the form of an operating line of credit (aka credit facility) Usually a gap between the time that cash is paid to suppliers for inventory and the time that money is received from customers who in the end, buy the inventory. Equity funds can finance cash flows, but receivables and inventories are reasonable collateral for loans, and it"s typically cheaper to borrow for this purpose. A limit on working capital loans, expressed as a percentage of the collateral base. Sale o(cid:396) assig(cid:374)(cid:373)e(cid:374)t of a (cid:272)o(cid:373)pa(cid:374)(cid:455)"s (cid:396)e(cid:272)ei(cid:448)a(cid:271)les to a fi(cid:374)a(cid:374)(cid:272)ial i(cid:374)stitutio(cid:374)