VB LtdRaises $150,000 by Issuing a Financial Instrument That Pays Interest

question 72

Multiple Choice

VB Ltd.raises $150,000 by issuing a financial instrument that pays interest at a rate of 8% per year to the investor.At the end of the fourth year, the financial instrument is retired for $155,000.If the financial instrument is treated as equity then:

• A)The repayment will decrease owners' equity
• B)Long-term liabilities is increased at issuance
• C)The interest payment decreases retained earnings
• D)If premium on repayment was not known, it is recorded as a loss on the income statement

---

Definitions:

Attentional Blink

A momentary lapse in visual processing that occurs when two stimuli are presented in close succession.

Stroop Effect

A demonstration of interference in the reaction time of a task, where naming the color of the word takes longer and is more prone to errors when the color of the ink does not match the name of the color.

Synaptic Connections

The points at which neurons communicate with each other through the release and reception of chemical messengers called neurotransmitters.

Response Dominates

A situation or condition in which one reaction or response prevails or is more prominent over others in influencing behavior or an outcome.