Equipment Is Acquired by Issuing a Note Payable for $50,000

question 108

Multiple Choice

Equipment is acquired by issuing a note payable for $50,000 and a making a down payment of $20,000. The statement of cash flows will report a:

• A) $70,000 outflow in the investing activities section
• B) $50,000 inflow in the financing activities section
• C) $20,000 outflow in the investing activities section
• D) $20,000 outflow in the operating activities section

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Definitions:

Zero Profits

Zero profits, or normal profit, occur when a company's total revenues exactly match total costs, leaving no net profit or loss.

Net Present Value

A financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time.

Interest Rate

The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Break Even

Break even refers to the point at which total revenues equal total costs, meaning that a business or project is neither losing nor making money.