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Which of the following returns is consistent with contractual cash flows that are solely payments of principal and interest or SPPI? I. Return of passage of time II. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation III. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset IV. Return for amounts to cover expenses and a profit margin

Which of the following returns is consistent with contractual cash flows that are solely payments of principal and interest or SPPI? I. Return of passage of time II. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation III. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset IV. Return for amounts to cover expenses and a profit margin

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Which of the following returns is consistent with contractual cash flows that are solely payments of principal and interest or SPPI?

I. Return of passage of time

II. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation

III. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset

IV. Return for amounts to cover expenses and a profit margin

 

a. I, II, III, and IV

b. I, II, and III

c. I and IV only

d. II and III only

 

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