If an Issuer Sells Bonds at a Date Other Than

question 164

Multiple Choice

If an issuer sells bonds at a date other than an interest payment date:

• A)This means the bonds sell at a premium.
• B)This means the bonds sell at a discount.
• C)The issuing company will report a loss on the sale of the bonds.
• D)The issuing company will report a gain on the sale of the bonds.
• E)The buyers normally pay the issuer the purchase price plus any interest accrued since the prior interest payment date.

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Definitions:

Departmental Predetermined

A rate calculated at the start of the accounting period, used to allocate overhead costs to products based on department-specific criteria.

Overhead Rate

A measure used to calculate how much overhead cost should be allocated to each unit of production, often based on direct labor hours or machine hours.

Assembly Department

A division within a manufacturing facility where parts are put together to form a finished product.

Machine-Hours

A measure used in costing to allocate expenses based on the number of hours a machine is operated.