Which of the Following Would Result If a Business Purchased

question 107

Multiple Choice

Which of the following would result if a business purchased Equipment with a 40% down payment and the rest on account?

• A)Equipment would increase and Cash would decrease.
• B)Accounts Payable would increase.
• C)Since the equipment has not been paid in full,there is nothing to record.
• D)Both A and B are correct.

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Definitions:

Equal Annual Withdrawals

Regular, identical amounts of money withdrawn from an investment or savings account over a designated period.

Annuity Due

An annuity due is a series of payments made at the beginning of each period in the cycle, such as monthly rent payments, as opposed to at the end of the period.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Compound Interest

The addition of interest to the principal sum of a loan or deposit, where the interest that has been added also earns interest.