When the Effective Interest Method of Amortization Is Used for a Bond

question 173

Multiple Choice

When the effective interest method of amortization is used for a bond premium,the amount of interest expense for an interest period is calculated by multiplying the

• A)carrying value of the bonds at the beginning of the period by the face interest rate.
• B)face value of the bonds at the beginning of the period by the effective interest rate.
• C)carrying value of the bonds at the beginning of the period by the effective interest rate.
• D)face value of the bonds at the beginning of the period by the face interest rate.

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Definitions:

True-RMS

A measurement of AC voltage or current that accurately reflects the root-mean-square value, providing a true representation of power in a circuit, regardless of waveform shape.

Harmonic Distortion

A deviation from the ideal wave form in signals, generally due to the presence of frequencies that are multiples of the original signal's frequency.

Phase Currents

The electric current flowing through one phase of a multi-phase system.

Neutral Conductor

The conductor in an electrical system that is grounded and carries current only under fault conditions, providing a path for current to return to its source in a balanced system.