When Making the Adjustment for Accrued Interest the Bond Discount

question 115

Multiple Choice

When making the adjustment for accrued interest the Bond Discount account was not taken into consideration. This error would cause:

• A) the period end assets to be overstated.
• B) the period end liabilities to be understated.
• C) the period's net income to be overstated.
• D) Both B and C are correct.

---

Definitions:

Spending Multiplier

The ratio of change in aggregate output (or income) to a change in spending that caused the change, showing how initial spending leads to increased total spending.

Autonomous Investment

Investment that does not change in response to alterations in the overall economy or income levels, such as public infrastructure investments.

Equilibrium Real GDP

The level of Gross Domestic Product where aggregate supply equals aggregate demand, adjusted for inflation.

Planned Aggregate Expenditure

The total amount households, businesses, and the government plan to spend on goods and services at different levels of national income.