How Will Decreases in the Following Items Affect Return on Investment

question 14

Multiple Choice

How will decreases in the following items affect return on investment (ROI) ?

• A)a
• B)b
• C)c
• D)d

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Definitions:

Effective Interest Method

An accounting practice used for calculating the amortized cost of a bond and the interest expense over the bond's life based on the effective interest rate.

Interest Expense

The expenditure related to borrowing funds that an entity faces over a specific duration.

Discount on Bonds Payable

The difference between the face value and the selling price when bonds are sold for less than their face value.

Long-Term Liabilities

Financial obligations of a business that are due more than one year in the future, such as bonds payable, long-term lease obligations, and pension liabilities.