A Bond Sells at a Discount When The

question 140

Multiple Choice

A bond sells at a discount when the:

• A) Contract rate is above the market rate.
• B) Contract rate is equal to the market rate.
• C) Contract rate is below the market rate.
• D) Bond has a short-term life.
• E) Bond pays interest only once a year.

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Definitions:

Recorded The Adjustment

The process of making entries to correct accounts or to account for transactions that have been missed in the financial records.

Subsidiary Ledger

A detailed ledger that supports and breaks down the information summarized in a general ledger.

Paid For Equipment

Refers to the cash outflow for the purchase of equipment, considered a capital expenditure in accounting.

Purchased On Account

Transactions where goods or services are bought on credit, with payment to be made at a later date.