When Bonds Are Converted to Common Stock,which of the Following

question 114

Multiple Choice

When bonds are converted to common stock,which of the following could be part of the entry?

• A) Credit to Gain on Conversion of Bonds
• B) Credit to Unamortized Bond Premium
• C) Credit to Unamortized Bond Discount
• D) Debit to Common Stock

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Definitions:

Short-term Debts

Obligations or loans that are due to be paid within one year or less, typically used to fund immediate operational needs.

Cash Basis Accounting

A financial recording approach where earnings and outlays are only acknowledged upon the receipt or payment of cash.

Accrual Basis Accounting

A financial recording system in which earnings and expenditures are logged when they happen, not necessarily when the payment is made or received.

Return on Assets

A financial ratio that measures how effectively a company is using its assets to generate profit, typically expressed as a percentage.