The Total Cost of Borrowing Is Increased Only If the

question 45

Multiple Choice

The total cost of borrowing is increased only if the

• A) bonds were issued at a premium.
• B) bonds were issued at a discount.
• C) bonds were sold at face value.
• D) market interest rate is less than the contractual interest rate on that date.

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Definitions:

Measurement Basis

The method or approach used in accounting to determine the value at which assets, liabilities, income, and expenses are recorded in the financial statements.

Cost

The value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore.

Revaluation

An adjustment of the value of an asset to reflect its current market value rather than its cost value.

Useful Life

The estimated period over which an asset is expected to be usable by a company before it is fully depreciated.