At a Given Point in Time, the Actual Price Paid

question 4

Multiple Choice

At a given point in time, the actual price paid for a three-month Treasury bill is

• A) usually equal to the par value.
• B) more than the price paid for a six-month Treasury bill.
• C) equal to the price paid for a six-month Treasury bill.
• D) none of the above

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Definitions:

Periodic Inventory Method

An accounting method where inventory and cost of goods sold are calculated at set intervals, such as yearly or quarterly.

Promissory Note

A formal written promise by a borrower to pay a certain sum at a fixed future date.

Notes Payable

Short-term or long-term liabilities recorded when a company borrows money, often in the form of a formal written agreement to pay a specified amount with interest.

Net Method

The net method accounts for purchase discounts by recording the initial purchase at net of the discount, encouraging prompt payment by recognizing discounts not taken as interest expense.