The Cash Flow to Creditors Increases When

question 35

Multiple Choice

The cash flow to creditors increases when

• A)cash is used to reduce accounts payable.
• B)new shares of stock are sold for cash.
• C)interest is paid on outstanding debt.
• D)an asset is sold for cash.
• E)a long-term debt is incurred.

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Definitions:

Average Gross Earnings

The average total amount of income earned by individuals or entities before any deductions or taxes are applied.

Base Salary

The initial rate of compensation given to an employee, excluding any bonuses or benefits.

Weighted-Average Inventory

A method of calculating the cost of inventory that takes into account the cost of goods sold and the remaining inventory.

Generally Accepted Accounting Principles

A set of rules and standards designed to improve the clarity, consistency, and comparability of financial reporting across different entities.