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

question 115

Multiple Choice

A company prepared the following journal entry: Which of the following statements is incorrect?
Bonds payable
Premium on bonds payable
Gain 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 gain on the bond retirement.
• C)The decrease in assets is less than the decrease in liabilities.
• D)The net cash flow from financing activities decreases by the cash payment.

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Definitions:

Silver

A precious metal with the symbol Ag, used in jewelry, currency, and industrial applications for its conductivity and reflective properties.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a certain period of time.

Put Option

A financial contract giving the holder the right to sell a specified amount of an underlying asset at a set price before a certain date.

GM Stock

Equity shares issued by General Motors Company, a major automotive manufacturer based in the United States.