The Following Is a Summary of Information Presented on the Financial

question 32

Multiple Choice

The following is a summary of information presented on the financial statements of The Cake Company on December 31, 2014. What would horizontal analysis report with respect to long-term liabilities?

• A)That long-term liabilities decreased by $30,000
• B)That long-term liabilities decreased by 40%
• C)That long-term liabilities decreased by 60%
• D)That long-term liabilities decreased by 67%

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Definitions:

Premium Amortization

The gradual expense or reduction of the premium paid above the par value of a debt security over its remaining term.

Interest Expense

The charge an entity bears for the funds it has borrowed over a set period.

Market Rate

The current price at which an asset or service can be bought or sold in a particular market.

Coupon Rate

The interest rate stated on a bond or other fixed-income security, expressed as a percentage of its face value.