Chapter 11 Short-Term Financing 11-1
11-1 Chapter 11 Short-Term Financing
Short-Term Financing Spontaneous Financing Negotiated Financing Factoring Accounts Receivable Composition of Short-Term Financing 11-2
11-2 Short-Term Financing Spontaneous Financing Negotiated Financing Factoring Accounts Receivable Composition of Short-Term Financing
Spontaneous Financing Types of spontaneous financing Accounts Payable Trade Credit from Suppliers) Accrued Expenses 11-3
11-3 Spontaneous Financing Accounts Payable (Trade Credit from Suppliers) Accrued Expenses Types of spontaneous financing:
Spontaneous Financing Trade Credit -credit granted from one business to another Examples of trade credit are: Open Accounts: the seller ships goods to the buyer with an invoice specifying goods shipped, total amount due, and terms of the sale Notes Payable: the buyer signs a note that evidences a debt to the seller 11-4
11-4 Spontaneous Financing Open Accounts: the seller ships goods to the buyer with an invoice specifying goods shipped, total amount due, and terms of the sale. Notes Payable: the buyer signs a note that evidences a debt to the seller. Trade Credit -- credit granted from one business to another. Examples of trade credit are:
Spontaneous Financing Trade Acceptances: the seller draws a draft on the buyer that orders the buyer to pay the draft at some future time period Draft-A signed, written order by which the first party(drawer) instructs a second party (drawee) to pay a specified amount of money to a third party (payee ). The drawer and payee are often one and the same 11-5
11-5 Spontaneous Financing Draft -- A signed, written order by which the first party (drawer) instructs a second party (drawee) to pay a specified amount of money to a third party (payee). The drawer and payee are often one and the same. Trade Acceptances: the seller draws a draft on the buyer that orders the buyer to pay the draft at some future time period