When a Company Both Borrows $150 Million During the Year

question 63

True/False

When a company both borrows $150 million during the year and repays $120 million of notes,the company can disclose the $30 million net amount as excess of borrowings over repayments in the financing activities section of the statement of cash flows.

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Definitions:

Depreciation Expense

The method by which the cost of a tangible or physical asset is allocated over its useful life.

Building

The physical structure intended for housing, manufacturing, or any other commercial or industrial activity.

Electric Bill

A periodic charge for the use of electrical energy provided by a utility company or supplier.

Understated Assets

Occurs when the book value of assets is reported at less than their actual value on the financial statements, potentially misleading stakeholders.