The Purchase of an Automobile Involving a Cash Down Payment

question 22

Multiple Choice

The purchase of an automobile involving a cash down payment and a promise to pay the balance in the future would include a debit to:

• A)Note Payable and a credit to Cash.
• B)Cash and a credit to Automobile.
• C)Cash and a debit to Note Payable.
• D)none of the above.

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Definitions:

Financing Activities

Transactions that involve raising capital, repaying investors, and altering the capital structure of the organization among other financing-related decisions.

Issuing Debt

The act of a corporation or governmental entity raising money by selling bonds or notes to investors.

Cash Dividends

Payments made by a company to its shareholders from its profit or retained earnings.

Statement Of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives.