As a Part of a Bond Issue, a Corporation Makes

question 12

Multiple Choice

As a part of a bond issue, a corporation makes annual payments into an account managed by a trustee for the purpose of repurchasing bonds. This arrangement is called:

• A) a call provision.
• B) a sinking fund.
• C) a funding provision.
• D) a trust maintenance fund.

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Definitions:

Direct Materials Purchased

The raw materials bought by a company that are directly used in the production of its goods.

Actual Variable Manuf. Overhead

The real costs incurred from indirect, variable production expenses, assessed after the production process is completed.

Variable Manufacturing Overhead

These are manufacturing overhead costs that vary with the level of production output, such as utilities or materials used in the manufacturing process.

Materials Price Variance

The difference between the actual cost of materials used in production and the expected cost based on standard prices.