When a Company Issues Bonds Between Interest Dates, the Entry

question 98

Multiple Choice

When a company issues bonds between interest dates, the entry to record the issuance of the bonds will:

• A) Include a credit to interest payable.
• B) Include a debit to interest expense.
• C) Include a debit to cash that has been reduced by interest accrued from the last interest date.
• D) Include a debit to cash that has been increased by interest that will accrue from sale to the next interest date.

---

Definitions:

Market Efficiency

A condition in financial markets where prices fully reflect all available information, leading to assets being priced accurately and trades being executed fairly.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.

Semi-Strong Form

The semi-strong form is a level of market efficiency theory suggesting that asset prices reflect all publicly available information.

Mechanistic Hypothesis

The hypothesis that share prices respond mechanistically to changes in accounting numbers, ignoring the effects of accounting policies.