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I watched your video on cash flow statement and you said business invests money in deposits in the bank and they receive interest in return but Could you please explain business also lend loans to others and receive interest in return?
Are business allowed to lend loans or other forms of lending to the general people and receives interet income in return?
When a business raise finance for the business then where fo they spent their money. In one of your lecture you said in non current assets to gain Long term profits but are there any other things where a business spent its money to generate income for the company?
Businesses can lend money and receive interest. They will not lend to the general public unless they are a bank (and the cash flows statements for banks have a different layout, but this is not examinable in Paper FA).
Businesses invest their finance in non-current assets which directly earn income for the business. Finance is also used to invest in current assets which are needed for the day-to-day running of the business.
Is it true that business can lend money to other businesses in the form of a loan which is the current asset in sOFP because it is our either short term or long term investment of the company?
Is it true that BOND, debenture and loan notes are not all loans but rather they are the form of borrowings from general public and they can also be borrowed from other businesses too?
Please explain.Could you also explain the difference between BOND, debentures and loan notes but to me they all are the same thing with different names?
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