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Accounting 4th 6 Weeks Test
Terms in this set (18)
3 sections of the statement of cash flows are
operating, investing, and financing
4 reasons that cash flows are important to business
-determine cash making potential
-ability to pay bills and debts
-explain changes in the cash balances
-investment and equity transactions
2 methods used to prepare the operating section of a statement of cash flows
direct and indirect
which method is typically used by most companies?
which method does GAAP prefer?
what are 4 ways in which a business can raise capital?
-short term debt
-long term debt
what is the debt that is usually used to finance short term day to day operations called?
line of credit or credit line
what is one advantage of line of credit financing?
only pay interest on the portion used; faster access to cash
types of debt financing
-line of credit
-loan (notes payable)
issuing stock is called ______________________________ financing
______________ assets are physical assets that will be used by a business for a number of years.
fixed assets are also
property, plant, and equipment assets
2 main types of fixed assets are
land, building, and property
accumulated depreciation is called a
accumulated depreciation has a normal ________________ balance
the ____________________ value is the amount that the company would expect to get if they were to sell a fixed asset at the end
4 methods of depreciation allowed by GAAP
-units of production
-sum of the year's digits
______________ assets are physical assets that will be used by a business for a number of years
Recommended textbook explanations
Cambridge IGCSE Business Studies
Karen Borrington, Peter Stimpson
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Principles of Economics
William A. McEachern
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