Which of the Following Is True About Non-Interest Bearing Notes

question 24

Multiple Choice

Which of the following is true about non-interest bearing notes?

• A)The most common method of determining the fair value of non-interest bearing notes is the discounted cash flow analysis.
• B)Non-interest bearing short-term payables may never be measured at the original invoice amount.
• C)A rule of thumb is to use the face value for non-interest bearing notes payable with a duration of greater than 90 days.
• D)A rule of thumb is to use the market value for non-interest bearing notes payable with a duration of 90 days or less.

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Definitions:

Minimum Imposed Price

A price floor set by the government or regulatory body, below which a good or service cannot be sold, often to protect producers.

Consumers

Individuals or groups that purchase goods and services for personal use rather than for manufacturing or resale purposes.

Producers

Entities that create, manufacture, or supply goods and services.

Price Ceiling

A government-imposed limit on how high a price is charged for a product, intended to protect consumers by preventing prices from reaching excessively high levels.