Lulu Purchased a Security That Promises to Pay $50 Twice

question 36

Multiple Choice

Lulu purchased a security that promises to pay $50 twice a year from January 15, 2015 to January 15, 2020 and then pay $1,000 on January 15, 2020. The security is a debt to the company that issued it. The security is a

• A) net investment to the company that issued it.
• B) bond.
• C) physical capital.
• D) share of stock.
• E) depreciating asset.

---

Definitions:

Selling

The process of promoting and selling goods or services, including marketing and advertising strategies.

Administrative Expense

Expenses incurred in the process of running a company that are not directly tied to a specific product or service, such as salaries of senior executives.

Responsibility Accounting

A system of accountability in which managers are held responsible for those items of revenue and cost—and only those items—over which they can exert significant control. The managers are held responsible for differences between budgeted and actual results.

Significant Variances

Discrepancies between planned and actual figures that are large enough to warrant attention and possibly corrective action by management.