At the Beginning of 2014, Gannon Company Received a Three-Year

question 77

Multiple Choice

At the beginning of 2014, Gannon Company received a three-year zero-interest-bearing $1,000 trade note.The market rate for equivalent notes was 8% at that time.Gannon reported this note as a $1,000 trade note receivable on its 2014 year-end statement of financial position and $1,000 as sales revenue for 2014.What effect did this accounting for the note have on Gannon's net earnings for 2014, 2015, 2016, and its retained earnings at the end of 2016, respectively?

• A)Overstate, overstate, understate, zero
• B)Overstate, understate, understate, understate
• C)Overstate, overstate, overstate, overstate
• D)None of these answer choices are correct.

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Definitions:

Deceptive Practices

Unethical or fraudulent activities designed to deceive or mislead consumers, often for financial gain or competitive advantage.

Domestic Demand

The total demand for goods and services within a country's borders, influenced by the country's population, income levels, and purchasing power.

International Competition

The competitive dynamics between companies operating in the same industry across different countries, influencing global market positioning and strategy.

Logistical Support

Involves the detailed coordination of a complex operation involving many people, facilities, or supplies, focusing on the efficient and effective transportation and storage of goods.