If a Long-Term Note Is Issued with Zero Interest or for Non-Monetary

question 40

Multiple Choice

If a long-term note is issued with zero interest or for non-monetary consideration,

• A) the debtor must first try to value the non-monetary asset(s) involved in the transaction.
• B) a reasonable interest rate must be imputed.
• C) the debtor always tries to create a gain with such a transaction.
• D) the note is a non-monetary liability.

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Definitions:

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, serving as a measure of a company's profitability.

Total Asset Turnover

A metric assessing how effectively a company utilizes its assets to produce income.

Return on Total Assets

A financial ratio that measures a company's ability to generate earnings from its total assets.

Bonds

Fixed income investments representing a loan made by an investor to a borrower, typically corporate or governmental, that pays back with interest.