Which of the Following Would Result When a Company Borrows

question 72

Multiple Choice

Which of the following would result when a company borrows cash and signs a note payable due in two years?

• A)A noncurrent liability and an investing cash flow are created.
• B)A noncurrent liability and a financing cash flow are created.
• C)A current liability and an investing cash flow are created.
• D)A current liability and a financing cash flow are created.

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Definitions:

Inventory Turnover

A financial ratio measuring how many times a company's inventory is sold and replaced over a period.

Cost of Goods Sold

A duplicated term; refers to the direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Ending Inventory

The value of goods available for sale at the end of an accounting period, after accounting for all sales and purchases during the period.

Average Sale Period

The average amount of time it takes for a company to convert its inventory into sales, reflecting the efficiency and effectiveness of its sales and inventory management.