Which of the Following Statements Is True When Bonds Are

question 64

Multiple Choice

Which of the following statements is true when bonds are issued at a premium?

• A)The carrying value decreases by equal amounts each year if straight-line amortization is used.
• B)The carrying value decreases by equal amounts each year if effective interest amortization is used.
• C)The carrying value decreases by larger and larger amounts each year if effective interest amortization is used.
• D)The carrying value decreases by equal amounts each year if straight-line amortization is used and decreases by increasing amounts each year if effective interest amortization is used.

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Definitions:

Net Operating Income

Profit generated from a company's core business operations, excluding deductions of interest and taxes.

Flexible Budget

A flexible budget adjusts based on changes in the volume of activity, allowing for a more accurate comparison of actual to budgeted performance.

Tenant-Days

The total number of days rented across all properties within a specified timeframe, used for calculating occupancy rates and revenue in the hospitality or rental sector.

Administrative Expenses

Costs related to the general operation of a business that are not directly tied to the production of goods or services, such as office supplies, salaries of administrative staff, and utilities.