Choose the Word or Phrase in [ ] Which Will

question 47

Short Answer

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement.
-[Depreciation | Amortization] is a loss in the value of an asset such as an automobile that occurs over its period of ownership.

Understand how interest earned on a sinking fund is accounted for and its effect on financial statements.

Calculate the gain or loss associated with the redemption of bonds.

Know the purpose and benefits of establishing a sinking fund for bond redemption.

Gain knowledge on journalizing transactions related to bonds, including issuance, interest payments, and retirement.

---

Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, often reported on the income statement.

Net Income

The company's net income following the subtraction of all costs, taxes, and financial losses.

Retained Earnings

The portion of a company's profit that is held back and not paid out as dividends to shareholders.

Cash Flow

The entire valuation of money transfers that flow into and exit a venture, significantly influencing its liquidity.