If the Deficit Is Increasing Because of the Effects of the Automatic

question 118

Multiple Choice

If the deficit is increasing because of the effects of the automatic stabilizers,

• A)all of the following
• B)the economy is contracting
• C)the annual deficit will approach zero
• D)the budget is cyclically balanced
• E)the economy is growing

Understand the concept and accounting treatments for collecting previously written-off accounts.

Recognize the parties involved in a promissory note and understand their roles.

Calculate the total interest on various notes receivable.

Understand the accounting entries related to receiving an interest-bearing note.

---

Definitions:

Par Value

The nominal or face value of a bond, stock, or other financial instrument, established at the time of issuance.

Semiannually

Occurring twice a year, often referring to payments or interest calculations.

Cash Paid

The total amount of cash disbursed by a company for various purposes, such as operating expenses, purchasing assets, or debt repayment.

Premium on Bonds Payable

The amount by which the cash received from issuing bonds exceeds their face value, signifying an interest rate lower than the market rate.