Skip to ContentGo to accessibility page
OpenStax Logo
Principles of Accounting, Volume 1: Financial Accounting

Why It Matters

Principles of Accounting, Volume 1: Financial AccountingWhy It Matters
Figure 13.1 Car Purchase. Purchasing a vehicle can be an exciting experience. A vehicle is a significant financial investment and buyers want to ensure they are getting a good value for their money. (credit left: modification of “Auto” by unknown/Pixabay, CC0; credit right: modification of “Guy” by unknown/Pixabay, CC0)

Chapter Outline

Why It Matters

Olivia is excited to be shopping for her very first car. She has saved up money from birthdays, holidays, and household chores and would like to get a vehicle so she can get a summer job. Her mother mentioned that a coworker is selling one of their vehicles.

Olivia and her family decide to go look at the vehicle and take it for a test drive. After inspecting the vehicle and taking it for a test drive, Olivia decides she would like to purchase the car. Olivia planned on spending up to $6,000 (the amount that she has saved), but the seller is asking $9,000 for this particular vehicle. Because the car has been well-maintained and has many extra features, Olivia decides it is worth spending the extra money in order to get reliable transportation. However, she is not sure how to come up with the additional $3,000. Olivia’s parents tell her she can get a bank loan of $3,000 to cover the difference, but she will have to repay the bank more than the $3,000 she is borrowing. This is because the loan will be repaid over a period of time, say twelve months, and the loan will require that she pay interest in addition to repaying the $3,000 in principal that she is borrowing. After meeting with the bank and signing the necessary paperwork to secure the $3,000 loan, a few days later Olivia returns to the seller with a check for $9,000 and is overjoyed to have purchased her first vehicle.

PreviousNext
Order a print copy
Citation/Attribution
Reuse and redistribution of this content in digital or print format:
  • This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's prior written permission.
  • This book uses the Creative Commons Attribution-NonCommercial-ShareAlike License, which means that you can reuse and modify the material only for noncommercial purposes, must attribute OpenStax, and must distribute any derivative works under the same license.
  • Any commercial printing of this textbook, including using a local or custom printer, must be approved by OpenStax, and proper citation provided.
  • OpenStax-copyrighted images, activities, assessments, and similar components of this book are subject to the same licensing – CC-BY-NC-SA. They can be used for noncommercial purposes with attribution. Commercial use requires permission.
  • Permission requests: Anyone who intends to incorporate this content (including text, images, and other components) into large language models, use it in AI offerings, use it commercially (including in print), and/or has questions about another use case is welcome to complete our reuse request form.
Attribution information
  • If you are redistributing all or part of this book in a noncommercial print format, then you must include on every physical page the following attribution:

    Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters

  • If you are redistributing all or part of this book in a noncommercial digital format, then for every page that includes OpenStax content, you must license the derivative work under the same CC-BY-NC-SA license as the original, and include on every digital page view the following attribution:

    Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters

Citation information

The information below includes the information needed to generate citations in most major styles (APA, MLA, etc.); you must reformat and organize the information as needed to fit the requirements of the style. Use the information below to generate a citation. We recommend using a citation tool such as this one.

© Apr 23, 2026 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License. The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo, and Rice University name, and Rice University logo trademarks, or wordmarks are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.