A Company Prepared the Following Journal Entry: Which of the Following

question 113

Multiple Choice

A company prepared the following journal entry: Which of the following statements is correct?
Bonds payable
Premium on bonds payable
Loss on bond retirement
Cash

• A) The book value of the bonds was less than the cash payment.
• B) The increase in stockholders' equity equals the loss on the bond retirement.
• C)The decrease in assets is greater than the decrease in liabilities and, as a result, stockholders' equity decreases.
• D)The net cash flow from financing activities decreases by the book value of the bonds payable.

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Definitions:

Inventory Carrying Costs

Inventory carrying costs include all expenses related to holding and storing unsold goods, such as warehousing, insurance, and spoilage.

Ordering Costs

Expenses associated with placing orders for more inventory, including costs related to order processing, communication, and transportation.

Memory Chips

Electronic components used to store data temporarily or permanently in computers and other devices.

Safety Stock

Safety stock is an additional quantity of an item held in inventory to reduce the risk of stockouts and production halts, serving as a buffer against demand fluctuations or supply delays.