The Constructive Gain or Loss to the Purchasing Company Is

question 28

Multiple Choice

The constructive gain or loss to the purchasing company is the difference between the:

• A) book value of the bonds and their par value.
• B) book value of the bonds and their purchase price.
• C) cost of the bonds and their par value.
• D) cost of the bonds and their purchase price.

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Definitions:

Collection Policy

The guidelines and procedures that a company follows to collect accounts receivables from its customers, including the timeline and actions for overdue payments.

Average Collection Period

The average number of days it takes for a company to receive payments owed by its customers, indicating the efficiency of a company's credit and collection policies.

Net Float

The difference between checks written against and deposited in an account, not yet cleared by the financial institution.

Cash Inflows

Money received by a business from its various activities, including sales, financing, and investments, contributing to its net cash flow.