Chapter 9
A recurring identical payment paid at the same time interval is called
An annuity
Stock that has been issued and repurchased by the company
Treasury Stock
The Operating Section of the Cash Flow Statement Begins with
Net Income
The depreciation method that results in the same amount of depreciation each year is
Straight-line Depreciation
What is the significance of using the aging method to estimate bad debt expense?
The older the debt the less likely to get paid
Bonds with a face value of $500,000 sold for $375,000, what does this mean?
They sold at a discount becasue the stated rate of the bond was less than the market rate
What document indicates the number of shares a company is authorized to issue
Corporate Charter
Depreciation expense would be included in which section of the cashflow statement?
Operating
The inventory method that results in the lowest cost of goods sold is
FIFO
First-in, Frist-Out
The company's ability to pay its short term debts is called
Liquidity
What is the type of loan where each payment is the same amount and each payment consists of principal and interest
Installment Loan
What accounts are used when recording par value common stock sold for more than par?
Common Stock (Par Value)
Additional Paid-in Capital (amount over Par)
A payment of a cash dividend will be classified in which section of the cashflow statement
Financing Section
How many years is Goodwill Amortized?
Zero, Goodwill is not amortized
Which TVM table would you use if you want to determine what the value of $1000 invested today will be in 5 years
Future Value of $1
What would the semi-annual interest payment be for a bond with a face value of $100,000, 8% bond, payments made June and December each year.
$4,000
$100,000 x .08 x 6/12
When issuing common stock with a par value, the par value should be recorded in what account?
Common Stock
Collecting on accounts receivables will be recorded in which section of the cashflow statement
Operating Section
What ratio would indicate if the company is selling inventory too slowly
A low inventory turnover ratio
When a company recieves a payment in advance for goods or services, they would record
Deferred Revenue (A liability)
What would be the interest expense recorded at 12/31/25 for a loan made on 8/1/25. The note payable is $300,000 (interest and amount borrowed is due in 12 months). The interest rate is 6% on this note.
$7500
$300,000 x .06 x 5/12
If a company has beginng retained earnings balance of $5, net income for the year was $6, and ending retained earnings of $7; what was the amount of the dividend paid?
$5 + $6 - ? = $7
? = $4
Loaning money to another company will be recorded in which section of the cashflow statement?
Investing Section
If a company had $100 in sales, $60 in expenses, $70 in gross profit, and $10 in net income, what is the cost of goods sold?
Sales $100- COGS $30=$70 Gross profit - Expenses $60 = $10 Net Income
Comparing sales growth over multiple years is what type of analysis?
Horizontal Analysis