If Bonds Are Initially Sold at a Discount and the Straight-Line

question 74

Multiple Choice

If bonds are initially sold at a discount and the straight-line method of amortization is used, interest expense in the earlier years will

• A) exceed what it would have been had the effective-interest method of amortization been used.
• B) be less than what it would have been had the effective-interest method of amortization been used.
• C) be the same as what it would have been had the effective-interest method of amortiza-tion been used.
• D) be less than the stated (nominal) rate of interest.

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Definitions:

Theory of Reasoned Action

A psychological theory that predicts an individual's intention to engage in a behavior at a specific time and place, considering attitudes toward the behavior and subjective norms.

Behavioral Control

involves the regulation of one's behavior, including the ability to start, maintain, or cease actions in accordance with one's goals and societal norms.

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time.

Dissonance Situation

A psychological state where an individual experiences discomfort or conflict due to holding two or more contradictory beliefs, ideas, or values at the same time.