Which of the Following Statements Regarding the Effective Interest Method

question 133

Multiple Choice

Which of the following statements regarding the effective interest method of accounting for bonds is false?

• A)GAAP requires use of the effective interest method.
• B)The amount of periodic interest expense decreases over the life of a discounted bond issue when the effective interest method is used.
• C)Over the life of the bond, the carrying value increases for discounted bonds when using the effective interest method.
• D)The effective interest method applies a constant percentage to the bond carrying value to compute interest expense.

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Definitions:

ISO Flares

Refers to a type of flared tube fitting standard set by the International Organization for Standardization, commonly used in hydraulic and pneumatic systems.

SAE Flares

A type of flare fitting standard set by the Society of Automotive Engineers for secure hydraulic and pneumatic connections.

Manual Bleeding

The procedure of manually removing air from a hydraulic system, commonly used with brake and clutch systems in vehicles.

Brake Line Fittings

Components used to connect sections of brake lines together, ensuring a leak-proof connection in the braking system.