A Bond That Is Backed Only by the Reputation of the Issuing

question 25

Multiple Choice

A bond that is backed only by the reputation of the issuing corporation is called a(n) ________ bond.

• A)debenture
• B)mortgage
• C)indenture
• D)preemptive
• E)treasury

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Definitions:

Separate Entity Assumption

An accounting principle that treats a company as an independent entity separate from its owners for reporting purposes.

Noncurrent Asset

A noncurrent asset is a long-term investment or property that a company does not expect to convert into cash within one year.

Investing Cash Flow

Investing cash flow refers to the cash inflows and outflows associated with the purchase and sale of long-term investments and capital assets.

Current Ratio

A liquidity ratio that measures a company's capacity to pay off its short-term liabilities with its short-term assets.