Advance Payment Normally Takes the Form of a Sight Draft

question 145

True/False

Advance payment normally takes the form of a sight draft.

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Definitions:

Amortization Expense

The gradual write-off of the cost of an intangible asset over its useful life.

Accrual Basis

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Indirect Method

A way of preparing the cash flow statement, where net income is adjusted for non-cash transactions and changes in working capital.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption or wear and tear.