210

question 44

Multiple Choice

210. Over the term of the bonds, the balance in the Discount on Bonds Payable account will

• A) fluctuate up and down if the market is volatile.
• B) decrease.
• C) increase.
• D) be unaffected until the bonds mature.

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Definitions:

Cash Basis

A financial recording approach that logs income and expenditures at the time of actual receipt or payment, rather than when they are earned or owed.

Investing Activities

Transactions and events related to the acquisition and disposal of long-term assets and other investments not considered cash equivalents.

Financing Activities

Transactions that involve raising capital or repaying investors, such as issuing shares or taking out loans.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet items to obtain net cash flow from operating activities.