A Company That Produces Drugs Is Preparing a Statement of Financial

question 88

Multiple Choice

A company that produces drugs is preparing a statement of financial position.Which of the following would be most likely to be considered a long-term asset on this statement of financial position?

• A)commercial paper held by the company
• B)the inventory of chemicals used to produce the drugs made by the company
• C)a patent for a drug held by the company
• D)the cash reserves of the company
• E)money owed to the firm by customers who have purchased goods on credit

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Definitions:

Gross Monthly Income

The total personal income earned per month before any deductions like taxes or social security contributions.

Compounded Semi-annually

Interest calculation method where interest is computed on the principal and also on the interest from previous six-month periods, applied twice a year.

Amortized

The process of paying off a debt over time in regular installments of interest and principal sufficient to repay the loan in full by its maturity date.

Compounded Semi-annually

A technique used to compute interest in which the interest is compounded semi-annually by being added to the principal sum two times within the year.