Suppose the City of Des Moines Has a High Credit

question 15

Multiple Choice

Suppose the city of Des Moines has a high credit rating, and so when Des Moines borrows funds by selling bonds, the city's high credit rating

• A)and the tax status of municipal bonds both contribute to a lower interest rate than would otherwise apply.
• B)and the tax status of municipal bonds both contribute to a higher interest rate than would otherwise apply.
• C)contributes to a lower interest rate than would otherwise apply, while the tax status of municipal bonds contributes to a higher interest rate than would otherwise apply.
• D)contributes to a higher interest rate than would otherwise apply, while the tax status of municipal bonds contributes to a lower interest rate than would otherwise apply.

Understand payroll tax obligations imposed on both employee and employer.

Identify and differentiate between types of contingencies and their treatment in financial statements.

Understand the criteria for classifying liabilities as current or long-term.

Distinguish between accounting practices for contingencies under GAAP and IFRS.

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Definitions:

Gasoline

A flammable liquid derived from petroleum, used primarily as fuel in internal combustion engines.

Price Elasticity

An assessment of demand's elasticity regarding the pricing changes of a specific product.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices, holding all else constant.

Cost Function

An equation that calculates the total cost incurred by a company to produce a specific quantity of a good or service.