If $2,500,000 of Bonds Are Issued During the Year but $4,000,000

question 168

Multiple Choice

If $2,500,000 of bonds are issued during the year but $4,000,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

• A)net increase in cash of $1,500,000.
• B)net decrease in cash of $1,500,000.
• C)increase in cash of $2,500,000 and a decrease in cash of $4,000,000.
• D)net loss on retirement of bonds of $1,500,000.

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Definitions:

Total Asset Turnover

A financial ratio that measures a company's ability to generate sales from its assets, indicating operational efficiency.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's accounts receivable are collected during a certain period, reflecting its efficiency in extending credit and collecting debts.

Times Interest Earned Ratio

A financial ratio that measures a company's ability to honor its debt payments by comparing its interest expense to its operating income.

Operating Cycle

The duration between the purchase of inventory by a business and the receipt of cash from accounts receivable, indicating the speed at which a company turns inventory into cash.