Match the Following Bond and Long-Term Liability Related Terms to the Appropriate

question 134

Multiple Choice

Match the following bond and long-term liability related terms to the appropriate definition.
-The difference between the carrying value and the redemption price at the time bonds are redeemed.This amount is presented as an income statement account.

• A)Long-term liability
• B)Face value
• C)Debenture bonds
• D)Serial bonds
• E)Callable bonds
• F)Face rate of interest
• G)Market rate of interest
• H)Bond issue price
• I)Premium
• J)Discount
• K)Effective interest method of amortization
• L)Carrying value
• M)Gain or loss on redemption

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Definitions:

Marketable Securities

Financial instruments that can be easily converted into cash, such as stocks or bonds.

Operating Activities Section

A component of the cash flow statement showing cash inflows and outflows related to the primary business activities.

Direct Method

A way of preparing a cash flow statement where actual cash flows from operating activities are listed directly.

Capital Asset

An asset of significant value owned by a business or individual for a long period, usually used in the production of goods or services.