If a Company Buys Inventory on Account

question 82

Multiple Choice

If a company buys inventory on account:

• A)cash would decrease.
• B)accounts payable would increase.
• C)net income would increase.
• D)common stock would decrease.

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Definitions:

Fair Value

The estimated market value of an asset, liability, or financial instrument at a given point in time.

Goodwill Impairment

A decrease in the value of a company's goodwill asset, indicating that the value of an acquired company's brand, customer base, or proprietary technology has declined.

Depreciation Expense

The allocation of the cost of a tangible asset over its estimated useful life to account for wear and tear, obsolescence, or decay.

Coupon Rate

The interest rate that a bond issuer will pay to a bondholder.