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Which of the Following Accounting Ratios Considers the Importance of Cash

question 50

Multiple Choice

Which of the following accounting ratios considers the importance of cash flows relating to required interest payments?


Definitions:

Amortization

Amortization is the process of spreading out a loan into a series of fixed payments over time, or gradually writting off the initial cost of an intangible asset.

Discount on Bonds Payable

The difference when bonds are issued for less than their face value, representing an extra cost of borrowing to the issuer.

Straight-Line Method

A method of calculating depreciation or amortization by evenly spreading the cost of an asset over its useful life.

Amortization

The process of spreading the cost of an intangible asset over its useful life.

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