Indirect Finance Occurs When

question 27

Multiple Choice

Indirect finance occurs when

• A) savers go directly to borrowers for funds.
• B) borrowers deposit funds into banks,which then loan these funds to savers.
• C) savers deposit funds into banks,which then loan these funds to borrowers.
• D) borrowers go directly to savers for funds.
• E) firms give bonds.

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Definitions:

Allowance Method

An accounting technique used to estimate and prepare for the amount of accounts receivable that may not be collected.

Contra Asset Account

An account on a company's balance sheet that reduces the value of a related account, used to account for items like depreciation, amortization, and allowances for doubtful accounts.

Realizable Value

The estimated amount that an asset can be sold for at the end of its useful life, minus any disposal costs.

Pledges Receivables

Amounts promised by donors to an organization that are still outstanding.