When the Straight-Line Method of Amortization Is Used for a Bond

question 104

Multiple Choice

When the straight-line method of amortization is used for a bond discount, the amount of interest expense for an interest period is calculated by

• A)adding the amount of discount amortized for that period to the amount of cash paid for interest during the period.
• B)subtracting the amount of discount amortized for that period from the amount of cash paid for interest during the period.
• C)multiplying the face value of the bonds by the stated interest rate.
• D)multiplying the face value of the bonds by the market interest rate.

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Definitions:

Control Group

In experimental research, it is the group that does not receive the treatment or intervention, serving as a baseline to compare against the experimental group.

Dimly Lit Room

A room that is lightly illuminated, often creating a subdued or intimate atmosphere.

Experimental Group

In an experiment, the group of participants that receives the treatment or intervention under investigation, as opposed to the control group.

Random Assignment

Assigning participants to experimental and control groups by chance, thus minimizing preexisting differences between the different groups.