Receiving Payment of a Portion of an Accounts Receivable Will

question 205

Multiple Choice

Receiving payment of a portion of an accounts receivable will

• A)not affect total assets.
• B)increase liabilities.
• C)increase stockholders' equity.
• D)decrease net income.

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Definitions:

Extraordinary Gain

A gain resulting from events or transactions that are both unusual in nature and infrequent in occurrence, separated from regular business operations.

Fair Market Value

The price at which an asset would sell in the market under conditions where buyers and sellers are acting freely, informed, and without undue pressure.

Book Value

The net value of a company's assets as listed on the balance sheet, calculated as total assets minus intangible assets (like goodwill) and liabilities.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.