Which of the Following Is Not True for a 10-Year

question 27

Multiple Choice

Which of the following is not true for a 10-year bond issued at a discount?

• A)At the end of ten years,the balance in the Discount on Bonds Payable account will equal 0.
• B)At the end of ten years,the carrying value will equal the face value.
• C)At the end of ten years,the total interest expense will reflect the market rate of interest.
• D)At the end of ten years,the total interest expense will equal the total interest paid.

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Definitions:

Asset Approach

A valuation method that estimates a company's value based on the total value of its assets minus its liabilities.

Liability Approach

A method in accounting that emphasizes recording all financial liabilities at their current value to ensure accurate financial reporting.

Deferred Income Tax Asset

A financial statement item that refers to taxes that have been accrued but not yet paid, which is considered a company asset because it indicates future tax payments that are lower than the current tax expense.

Income Before Taxes

A financial measure indicating the profitability of a company before accounting for income taxes.