Which of the following transactions is an example of indirect financing? Alibaba’s IPO conducted by the...
Which of the following transactions is an example of indirect financing?
- Alibaba’s IPO conducted by the major investment banks
- Woolworth takes a 3-month loan from Westpac to purchase inventory
- Mary lent $20,000 to her friend to buy a new house
- None of the above
Homework Answers
Indirect financing is where borrowers borrow funds from the financial market through a financial intermediary like an investment bank which acts as an underwriter to an Initial public offering (IPO).
This is in contrast to direct financing in which borrowers and the lender directly deal with each other. So options b & c describe direct financing.
Thus the correct answer is Option a. Alibaba's IPO
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and Preparing Journal Entries [LO 2-3] At the beginning of August,
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online. He is passionate about books but does not have a lot of
accounting experience. The company purchased equipment for $4,900
cash. The equipment is expected to be used for 10 or more years.
Joel’s business bought $7,900 worth of inventory from a publisher.
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identifying transactions and preparing journal
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accounting experience. The company purchased equipment for $4,900
cash. The equipment is expected to be used for 10 or more years.
Joel’s business bought $7,900 worth of inventory from a publisher.
The company will pay the publisher within 45–60 days. Joel’s friend
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