Which of the Following Is Not True Regarding Bonds

question 22

Multiple Choice

Which of the following is not true regarding bonds?

• A)​Bonds can be purchased from corporations as well as governments.
• B)​Interest must be paid to bondholders before dividends are paid to stockholders.
• C)​Bondholders face no risk from changing market interest rates on bonds that have a fixed interest rate.
• D)​The capital gains on bonds are generally more limited than the capital gains on stocks.

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Definitions:

Adjusting Entries

Entries recorded in financial journals at the conclusion of an accounting period for the purpose of assigning earnings and expenditures to their rightful period.

Work Sheet

A document or tool used in accounting to gather information and perform calculations for preparing financial statements and other reports.

Retained Earnings

The portion of a company's profits not distributed as dividends but retained for reinvestment in the business or to pay off debt.

Income Summary

An account used in the closing process during the accounting cycle that sums up all revenues and expenses for the period to determine the net income or loss for the period.