- ________ activities include obtaining cash to pay debts or to repay amounts the company has borrowed.
financing
- A company records a liability in their accounting books when they
owe money to a bank, an investor, or another company.
- If Company B sells goods to a customer but does not receive cash immediately, Company B has a(n)
account receivable
- Resources that are owned by a company are called
assets
- Companies are most likely to use cash from financing activities to purchase
fixed assets
- At the end of the accounting period on December 31, 2016, Rose Industries records wages payable of $42,500. For the same accounting period, Romero Industries does not need to record wages payable. Why?
The end of the accounting period fell on a payday for Romero Industries but not for Rose Industries.
- Kim's Flowers decided to borrow $26,000 from the bank to purchase a new delivery vehicle. How should they categorize this business activity?
as both a financing activity and an investing activity
- What is the difference between accounts receivable and accounts payable?
Accounts receivable is money owed to a company by customers, whereas accounts payable is money that the company owes to suppliers.
- In 2016, Alexander Industries had two major transactions involving stocks. The first transaction was a financing activity, and the second transaction was an investing activity. Which of the following transactions likely occurred?
In the first transaction, Alexander Industries sold company stock to investors. In the second transaction, Alexander Industries purchased stock of another company.
- Mark and Sally both decided to invest in the same company. Mark does not like risk, so he purchased bonds from the company. Sally does not mind a little bit of risk, so she purchased stocks from the company. What is the difference between Mark's and Sally's expectations of the company?
Mark expects to be paid back for his investment with interest, whereas Sally only expects to receive dividends from her investment unless she decides to sell her stocks.