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:

Return on Equity

A financial ratio that measures the profitability of a firm in relation to its equity, indicating how well a company uses investments to generate earnings growth.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, often referred to as shareholder's equity or owners' equity.

Gross Margin Percentage

A financial metric that measures the proportion of money left over from revenues after accounting for the cost of goods sold, expressed as a percentage.

Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specific period.