The assets most commonly used as collateral for short-term financing include
A) cash and accounts receivable.
B) accounts payable and notes payable.
C) inventory and equipment.
D) marketable securities and owners' equity.
E) accounts receivable and inventory.

Question

Quizplus · Accepted Answer

Accounts receivable and inventory are the two most commonly used assets as collateral for short-term financing. Accounts receivable are considered a reliable source of collateral because they represent claims against customers for cash, while inventory can be used as collateral because it can be readily sold in the event of default.

The Assets Most Commonly Used as Collateral for Short-Term Financing