The Flow of Funds from Saving to Investment Through Direct

question 70

Multiple Choice

The flow of funds from saving to investment through direct financing involves

• A) the saver holding the lender's IOU.
• B) two separate contracts.
• C) the lender holding the borrower's IOU.
• D) several different financial institutions.

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Definitions:

Liabilities

Financial obligations or debts owed by a business to another entity, payable in money, goods, or services.

Notes Payable

Refers to promissory notes a company issues, promising to pay a specific amount of money at a future date.

Salaries

Regular payments made to employees for their services, often expressed as an annual amount but payable in smaller increments such as monthly or biweekly.

Accounts Payable

Obligations owed by a company to suppliers or creditors for goods and services received but not yet paid for.