If Southwest Airlines Borrows $20 Million from a Bank to Finance

question 125

Multiple Choice

If Southwest Airlines borrows $20 million from a bank to finance the renovation of their corporate offices, this is an example of

• A)a bond market transaction.
• B)indirect finance.
• C)a stock market transaction.
• D)direct finance.

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Definitions:

Ledger Accounts

Records within a ledger that show all the financial transactions of a specific account, summarized.

Book of Original Entry

It is the initial record where financial transactions are documented in the accounting system.

Accounts Payable

Debts of a business to creditors arising from the acquisition of goods and services on credit.

Purchases on Account

Transactions where goods are bought and the payment is deferred to a future date, often recorded in accounts payable.