Essay Available:
Pages:
1 pages/≈275 words
Sources:
2
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 4.68
Topic:
AF-U6D
Essay Instructions:
Credit card usage in the United States is substantial. Many startup companies use credit cards as a way to help meet short-term financial needs. The most common form of debt for startups are use of credit cards and loans from relatives.
Suppose that you start up Fantastic Sandwich shop. You invested your savings of $20,000 and borrowed $70,000 from your relatives. Although sales in the first few months are good, you see that you may not have sufficient cash to pay expenses and maintain your inventory at acceptable levels, at least in the short term. You decide you may need to use one or more credit cards to fund the possible cash shortfall.
How is credit card debt recorded by the company? What options does the company have in the short term? in the long term?
Essay Sample Content Preview:
AF-U6D
Name
Instructor
Institution
Date
A company can use a credit card to make purchases for its business, which would in turn increase its inventory. Company credit cards usually draw funds from the company and as a result, they are usually treated as a liability on the company’s books of account (Stavins,2020). The use of credit card by an organization simply works to result in a net negative on the books. The more the company uses the credit card, the more it also reduces its cash account. The use of the credit card by the company depends on whether it is long term or short term.
When the credit card is used to fill a gap in expenditure, it has the benefit of doing just that but the disadvantage is that the long-term int...
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now: