A 10-Year Bond That Pays Interest Annually Was Issued at a $5,000

question 219

Multiple Choice

A 10-year bond that pays interest annually was issued at a $5,000 premium.The entry to record the payment of interest using straight-line amortization will include a ________ to Premium on Bonds Payable for ________ each period.

• A)credit;$500
• B)debit;$500
• C)debit;a greater amount each period
• D)credit;a lower amount each period

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Definitions:

Dividends Paid

A corporation's distribution of earnings to its shareholders, generally as a profit allocation.

Return On Assets

A financial ratio that indicates how profitable a company is relative to its total assets, measuring efficiency in generating profits.

Net Income

The net income of a business following the deduction of all costs, such as operational expenses and taxes, from its overall revenue.

Average Total Assets

An indicator of a company's financial health, calculated by adding the beginning and ending total assets for a period and dividing by two.