Use the Equation Presented Below to Answer the Question That

question 103

Multiple Choice

Use the equation presented below to answer the question that follows:
Cash = CL + LTL + CS + RE - NCCA - LTA
Where: CL = Current liabilities
LTL = Long-term liabilities
CS = Common stock
RE = Retained earnings
NCCA = Noncash current assets
LTA = Long-term assets
Which of the following activities results in a cash inflow?

• A)Increases in noncash current assets NCCA)
• B)Decreases in current liabilities CL)
• C)Increases in common stock CS)
• D)Decreases in retained earnings RE)

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Definitions:

Payment

The act of transferring money, or its equivalent, from a buyer to a seller as compensation for goods or services.

Effective Interest Method

A method of calculating the amortized cost of a bond or loan based on periodic cash flows and interest expense adjustments.

Interest Expense

The cost incurred by an entity for borrowed funds.

Premium on Bonds Payable

The amount by which the selling price of a bond exceeds its principal (face value), often resulting from interest rates lower than the bond's coupon rate.