The Adjustment for Changes in Operating Working Capital Accounts Depends

question 59

Multiple Choice

The adjustment for changes in operating working capital accounts depends in part on a firm's rate of growth.Some firms use suppliers or other creditors to finance these working capital needs, which are

• A)classified as operating activities.
• B)classified as financing activities.
• C)classified as investing activities.
• D)disclosed in a supplementary schedule or notes to the financial statements.
• E)disclose such changes in managements' discussion and analysis.

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Definitions:

Bond Premium

The amount by which the selling price of a bond exceeds its face value, typically resulting from interest rates lower than the bond's coupon rate.

Interest Payment

The payment made to creditors or bondholders as compensation for the use of borrowed money, typically calculated as a percentage of the principal.

Journal Entry

A record of a financial transaction in an accounting system, noting the accounts and amounts debited and credited.

Interest Expense

The cost incurred by an entity for borrowed funds, often expressed as an annual percentage of the principal.