Amortized Discount Is Computed Annually When a Bond Is Issued

question 97

Multiple Choice

Amortized discount is computed annually when a bond is issued for other than its face value. For a bond issued at a discount, how will this component change as the bond approaches maturity?

• A) Decrease
• B) Increase
• C) Remain constant
• D) Not enough information given to decide.

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Definitions:

Raw Materials

Basic materials used in the production process to manufacture finished goods.

Raw Materials Inventory

The total cost of all the materials that are held by a company and that will be used in production.

Raw Materials Purchases

refer to the acquisition of the basic inputs required to manufacture products; these materials have yet to be processed or used in production.

Raw Materials Available

Raw materials available refer to all the materials that are in stock and ready to be used in the production process at a given time.