A Company's First Event in the Year Commencing 1 July

question 37

Multiple Choice

A company's first event in the year commencing 1 July 2016 was to pay $250 cash for stationery purchased in June 2016;this was recognised as an expense in that month.Which of the following changes took place as a consequence of this event?

• A) Assets increased by $250.
• B) Liabilities decreased by $250.
• C) Expenses increased by $250.
• D) None of the above changes occurred.

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Definitions:

Face Amount

The face amount is the value of a financial instrument, such as a bond or life insurance policy, as stated on the instrument itself.

Interest Payments

Payments made periodically, often annually or semi-annually, as compensation for borrowing money, calculated as a percentage of the total amount borrowed.

Bond Price

The market price for which a bond is bought or sold, influenced by interest rates, credit quality, and maturity.

Interest-Bearing Note

A debt instrument that pays interest to the holder at a fixed or variable rate until its maturity.