How Does the Amortization of the Discount on a Note

question 66

Multiple Choice

How does the amortization of the discount on a note payable affect the elements of a company's financial statements?

• A)Decreases interest expense and decreases liabilities
• B)Decreases interest expense and increases liabilities
• C)Increases interest expense and decreases liabilities
• D)Increases interest expense and increases liabilities

---

Definitions:

Constant Marginal Cost

A situation in which the cost of producing one additional unit of a product remains the same, regardless of the volume produced.

Average Fixed Cost

The cost that a company incurs for fixed resources divided by the quantity of output produced.

Diminishing Marginal Returns

A principle in economics where each additional unit of input results in a smaller increase in output after a certain point.

Study Time

The period dedicated by an individual or group towards learning or academic activities.