Describe the purpose of the statement of financing including illustrations of the major components of the statement. The components that should be discussed are resources used to finance activities, resources used to finance items that are not part of the net cost of operations, and components of the net cost of operations that will not require or generate resources in the current period.
A statement of financing is document written to show an agreement between a lender and a borrower and mostly relates to security provided by the borrower. The purpose of writing a statement of financing is for the creditor to be able to prove that he or she has interest or claim on the security or collateral and it also serves to inform other creditors of the interest. Statement of financing is registered to perfect security interest and informs the public that an agreement exists between the lender and borrower over the security (Department of State, 2011).
A statement of financing requires an expiry date if registration is less than 5 years, details of the lender, security details, and details of the secured party. Components of statement of financing include resources used to finance activities, resources used ...
Statements of financing are examined.