Which Statement Is True

question 129

Multiple Choice

Which statement is true?

• A)The carrying amount of the bonds will decrease each year if the bonds were issued at a discount.
• B)The carrying amount of the bonds will decrease each year if the bonds were issued at a premium.
• C)Total interest expense will increase each year if the bonds are issued at a discount and the straight-line method of amortization is used.
• D)Total interest expense will increase each year if the bonds are issued at a premium and the effective interest method of amortization is used.

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Definitions:

Common Size Balance Sheet

A balance sheet where all entries are expressed as a percentage of total assets, facilitating comparison across time and companies.

Total Assets

The sum of all assets owned by an entity, including cash, investments, inventory, and fixed assets.

Total Equity

The total value of a company's assets minus its total liabilities, representing the owners' equity in the company.

Common Size Cash Flow Statement

A financial statement that presents all line items as a percentage of total cash inflows, facilitating comparison across periods or companies.