Accounting Transactions Are Very Important to a Firm's Operations

question 43

Multiple Choice

Accounting transactions are very important to a firm's operations. Which of the following activities would affect the firm's account balances?

• A) buying and selling goods and services
• B) interviewing prospective employees
• C) understanding economic reports
• D) forecasting consumer demand

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Definitions:

Discounted Basis

A method of purchasing or selling a financial instrument (e.g., a bond) for a price that is below its nominal or face value, reflecting the present value of its future cash flows.

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid, respectively.

Discounted Payback Period

The time required to recover an investment's costs, taking the time value of money into account by discounting future cash flows.

Operating Cash Flow

Cash generated from a company's normal business operations, indicating whether a company is able to generate sufficient positive cash flow to maintain and grow its operations.