An Invoice from a Consultant Was Received for Work Done

question 16

Multiple Choice

An invoice from a consultant was received for work done in May 2019. There was no previous record of the transaction. It will be paid in July 2019. In May 2019:

• A) an asset decreased and an expense increased.
• B) an asset decreased and a liability decreased.
• C) a liability increased and an expense increased.
• D) no entry is required until the next accounting period.

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Definitions:

Coupon Rate

Each year's interest rate on a bond displayed as a percentage of the bond's face value.

Cost of Capital

The minimum earnings rate a corporation must achieve on its projects to sustain its market valuation and draw in investments.

After-Tax Cost of Debt

The net cost of debt to a company after accounting for the tax deductions obtained on interest payments.

Bond Rating

A rating assigned to a bond that indicates its credit quality. The rating reflects the issuer's ability to repay the bond's principal and interest.