Use the Following Information for Questions

question 34

Multiple Choice

Use the following information for questions
A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments.
-If the loan is a discount loan, what are the net proceeds of the loan?

• A) $2,200
• B) $2,100
• C) $2,000
• D) $1,800
• E) Cannot be determined

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Definitions:

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate cash flow from operating activities.

Depreciation Expense

The allocated portion of the cost of a tangible fixed asset written off each year, reflecting its usage and wear and tear.

Patent Amortization

The gradual expensing of the cost of a patent (an intangible asset) over its useful life.

Quality Of Income Ratio

A metric assessing the proportion of income that has been realized or converted into cash, providing insight into the company's cash flow quality.