Match Each Term with the Appropriate Definition

question 175

Multiple Choice

Match each term with the appropriate definition.Not all definitions will be used.
-Effective interest method of amortization

• A)Liquid assets divided by current liabilities.
• B)A calculation that determines what some future payments are worth today.
• C)The ability to pay current obligations.
• D)These are liabilities that have to be paid in one year or less.
• E)A bond feature that puts a creditor ahead of other creditors in order of payment.
• F)Net income before taxes and interest expense divided by interest expense.
• G)Where interest expense is the market interest rate times the bond's carrying value.
• H)Current liabilities divided by current assets.
• I)These are liabilities that do not have to be paid within the upcoming year.
• J)Net income after taxes and interest expense divided by interest expense.
• K)Spreads a bond discount or premium evenly over the lifetime of the bond.
• L)The amount of all the liabilities currently on the balance sheet at the close of the period.

---

Definitions:

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to investors, which are reinvested into the business.

Revenues

The cumulative revenue produced from selling goods or services that are fundamental to a company's main activities.

Cash Dividend

Profits distributed by a company to its shareholders, usually as a form of payment.

Income Statement

A financial statement that shows a company's revenues, expenses, and profit over a specific period.