A Payment to a Creditor Would Increase Assets and Decrease

question 117

True/False

A payment to a creditor would increase assets and decrease liabilities.

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Definitions:

Straight-line Method

A depreciation method that allocates an equal portion of the initial cost of an asset to each year of its useful life.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, accounting for time value of money.

Compounded Annually

A method of calculating interest where the interest is added to the principal at the end of each year, and the following year's interest is calculated on the total amount.

Amortization of Bond Discount

The gradual reduction of a bond discount over the life of the bond, transferring it from the balance sheet to interest expense on the income statement.