Under the Accrual Basis of Accounting,expenses Are

question 12

Multiple Choice

Under the accrual basis of accounting,expenses are

• A)always paid in cash.
• B)recorded only when paid.
• C)recorded when incurred.
• D)only relevant for the determination of net income.

---

Definitions:

Bonds

These are fixed-income investment products where an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate.

Debt Instruments

Financial assets that represent a debtor's obligation to repay borrowed money or other forms of credit to the creditor according to stated terms.

Original Issue Discount

The difference between the par (face) value of a bond and the lower price at which it was originally sold, which must be reported as interest income over the life of the bond.

Tax-exempt Debt

Debt securities issued by state or municipal governments whose interest payments are exempt from federal income tax, and sometimes state and local taxes.