The Journal Entry to Record Amortization of a Bond Discount

question 24

Multiple Choice

The journal entry to record amortization of a bond discount on a held-to-maturity investment includes a:

• A)debit to Cash and a credit to Investment in Bonds.
• B)debit to Cash and a credit to Interest Revenue.
• C)debit to Investment in Bonds and a credit to Interest Revenue.
• D)debit to Interest Revenue and a credit to Investment in Bonds.

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Definitions:

Management by Exception

A management strategy where only significant deviations from set standards are brought to the attention of management.

Variances

The differences between planned or expected financial outcomes and the actual results achieved.

Fixed Budget

A budget that outlines expected revenues and expenses over a specific period, which does not adjust in response to changes in business activity levels.

Static Budget

A budget that does not change or adapt to variations in business activity levels throughout the budgeting period.