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Chapter 4 - Review the Facts A Internal financing provides...

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Review the Facts A. Internal financing provides funds for the operation of a company through the earnings process of the company. External financing is the acquisition of funds from outside the company. Equity and debt financing are the two major types of external financing. B. Equity (sale of stock) and debt financing are the two major types of external financing. C. Consumer borrowing represents loans obtained by individuals to buy homes, cars, and other personal property. Commercial borrowing is the process that businesses go through to obtain financing. D. The three major types of financial institutions that provide financing in the U.S. today are savings and loans, credit unions, and commercial banks. E. Interest is the cost to the borrower for the use of someone else’s money. Interest is also what can be earned by lending money to someone else. F. When a company borrows money the assets of the company increase and the liabilities of the company increase.
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