If It Takes Diamondback Enterprises 90 Days to Sell Inventory,46

question 154

Multiple Choice

If it takes Diamondback Enterprises 90 days to sell inventory,46 days to collect from the sale,and creditors' payment terms are 60 days,the financing period is

• A)196 days.
• B)46 days.
• C)90 days.
• D)76 days.

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Definitions:

Carrying Amount

The value at which an asset is recognized in the balance sheet after deducting accumulated depreciation and impairment losses.

Residual Value

The estimated value that an asset will realize upon its disposal at the end of its useful life.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset evenly over its useful life.