When a Firm Collects the Face Value of a Long-Term

question 56

Multiple Choice

When a firm collects the face value of a long-term investment in bonds at maturity:

• A)both assets and equity of the firm remains unchanged.
• B)both assets and liabilities of the firm increase.
• C)both assets and equity of the firm increase.
• D)liabilities decrease and equity increases.

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Definitions:

Closing Entry

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts.

Financial Statements

Documents that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.

Proprietorship

A business owned by a single individual who is responsible for its assets and liabilities.

Personal Assets

Items of value owned by an individual, including cash, real estate, investments, and personal property.