Examples of Matching Expenses Against Revenues Using the Association of Cause

question 70

Multiple Choice

Examples of matching expenses against revenues using the association of cause and effect include all of the following except

• A)insurance costs
• B)transportation costs for delivery of goods to customers
• C)costs of products sold
• D)sales commissions

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Definitions:

Unamortized Discount

The portion of a bond discount that has not yet been charged to expense because the bond has not reached its maturity.

Times Interest Earned Ratio

A financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes (EBIT) to its interest expenses.

Callable Bonds

A type of financial instrument that allows the issuer to buy them back prior to the expiration date, for a pre-determined price.

Bond Indenture

A legal contract specifying the terms and conditions under which a bond is issued, including interest payments and repayment at maturity.