Which of the Following Statements Regarding the Effective-Interest Method of Amortization

question 116

Multiple Choice

Which of the following statements regarding the effective-interest method of amortization is incorrect?

• A)The amount of interest expense is different each period.
• B)The amount of discount or premium,on which amortization is calculated,increases each period.
• C)The effective-interest method is one of the options allowed by generally accepted accounting principles for all bond issues.
• D)The total interest expense over the life of a bond is the same as that reported under the straight-line method of amortization.

---

Definitions:

Met Needs

Refers to needs that have been satisfied, usually pertaining to the basic physical or psychological desires of an individual.

Incentive

A stimulus or reward that motivates or encourages an individual to perform an action or exhibit a specific behavior.

Drive Reduction

A motivational theory that posits that people are motivated to take actions that reduce psychological needs and maintain homeostasis.

Instinctive

Pertains to the inherent inclinations and responses that organisms are born with.