If a Bond Sells at a Discount, the Amortization of the Discount

question 48

Multiple Choice

If a bond sells at a discount, the amortization of the discount will:

• A) Have interest payment each period equal to interest expense
• B) Have no effect on interest expense for the period
• C) Have interest expense and interest payment computed on face value
• D) Have interest payments each period greater than interest expense
• E) Have interest payments each period less than interest expense

---

Definitions:

Cost of Goods Sold

The direct expenses associated with manufacturing the products sold by a business.

Beginning Inventory

The cost of commodities available for trading at the commencement of an accounting interval.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting the cost of goods sold.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period.