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

question 71

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 debt then:

• A)Retained Earnings is reduced as the interest payment is treated as a dividend distribution
• B)The repayment will decrease owners' equity
• C)Shareholders' equity is increased at issuance
• D)The interest payment decreases retained earnings

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Definitions:

Second Generation

Typically refers to the offspring of immigrants in a new country, or the next version or iteration of a product or technology.

Business Incubators

Organizations designed to support the successful development of entrepreneurial companies through an array of support resources and services.

Start-ups

Newly established businesses, often focused on unique products or services in their initial stages of development.

Small Businesses

Enterprises that are independently owned and operated, characterized by a small number of employees and relatively low volume of sales.