A Company Prepared the Following Journal Entry: Interest Expense
Premium $\quad$

question 10

Multiple Choice

A company prepared the following journal entry: Interest expense
Premium on bonds payable
$\quad$ Cash Which of the following statements incorrectly describes the effect of this journal entry on the financial statements?

• A)The bonds payable book value decreases by the amount of the debit to premium on bonds payable.
• B)Assets decrease by the amount of the credit to cash.
• C)Stockholders' equity decreases by the amount of the debit to interest expense.
• D)The cash payment is reported as a cash flow from financing activities.

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Definitions:

Financialization

The process by which financial institutions and markets gain a greater influence over economic policy and economic outcomes.

Financial Maneuvers

Strategies or operations undertaken by individuals or companies to optimize financial outcomes.

Capital Investments

Expenditures by a company on physical assets like property, industrial buildings, or equipment to improve its operations and productivity.

Labor Law Reform

Changes proposed or enacted in legislation to address issues in labor markets, including working conditions, employee rights, and union activities.