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:

Break-Even Time

The period it takes for a business to recover its investments or expenses and start generating profit.

Highest Rank

Refers to the position or level within a hierarchy or organizational structure that is at the top or most senior.

Payback Periods

The amount of time it takes for an investment to generate cash flows sufficient to recover its initial cost.

Investments

Items or resources purchased with the intention of earning income or increasing in value as time goes on.