Which of the Following Statements About the Issuance of Bonds

question 113

Multiple Choice

Which of the following statements about the issuance of bonds at a discount is not correct?

• A)The contra liability account,Discount on Bonds Payable,is amortized each year by shifting part of its balance to interest expense.
• B)As the current date approaches the maturity date,the carrying value of the bond approaches the face value of the bond.
• C)At the date of issuance,the market interest rate was higher than the stated interest rate.
• D)The account used to record the discount is a normal credit balance account.

Analyze how changes in balance sheet accounts affect cash flows from operating activities.

Interpret comparative balance sheets and income statements to assess cash flows and financial position.

Determine cash flows from investing activities based on changes in fixed assets and investments.

Understand the reporting differences in equity accounts between U.S. GAAP and U.K. GAAP.

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Definitions:

Exponential Distribution

A probability distribution used to model the time between events in a Poisson process, describing the times between events in a continuous but rare occurrence.

Poisson Probability

The probability of a given number of events happening in a fixed interval of time or space if these events occur with a known constant mean rate and independently of the time since the last event.

Successive Arrivals

The sequence in which entities arrive one after another, often analyzed in queue theory and time-series analysis.

Continuous Random Variables

Variables that can take an infinite number of values within a given range.