Debt Service Expenditures for Principal and Interest Are

question 115

Multiple Choice

Debt service expenditures for principal and interest are:

• A) Accrued
• B) Recorded when due but may be accrued at year end if debt service due date is less than 30 days after year end
• C) Recorded when due but may be accrued at year end if debt service due date is less than 60 days after year
• D) Expensed when incurred

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Definitions:

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.

Natural Monopoly

A monopoly that exists when increasing returns to scale provide a large cost advantage to having all output produced by a single firm.

Network Externalities

The effect that an additional user of a good or service has on the value of that product to others, often positive, as in the case of telecommunications networks.

Monopolist

A monopolist is a single supplier in a market who has significant control over prices and the availability of a product or service.