Which of the Following Are TRUE Concerning the Distinction Between

question 30

Multiple Choice

Which of the following are TRUE concerning the distinction between interest rates and returns?

• A)The rate of return on a bond will not necessarily equal the interest rate on that bond.
• B)The return can be expressed as the difference between the current yield and the rate of capital gains.
• C)The rate of return will be greater than the interest rate when the price of the bond falls during the holding period.
• D)The return can be expressed as the sum of the discount yield and the rate of capital gains.

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Definitions:

Unearned Rent

Income received in advance for rental periods that have not yet occurred, recognized as a liability until the service period is completed.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate period.

Rent Revenue

Income earned from leasing out property or equipment to another party, reported as part of the operating income in the profit and loss statement.

Accrued Expense

An accounting record of an expense that has been incurred but not yet paid, representing a company's obligation to make future payments for goods and services received.