Using the Straight-Line Method,the Semiannual Interest Expense of a 12%,$300,000

question 109

Multiple Choice

Using the straight-line method,the semiannual interest expense of a 12%,$300,000 bond for 15 years at 102 would be:

• A)$20,000.
• B)$18,000.
• C)$17,800.
• D)$35,600.

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Definitions:

Bank Overdrafts

An extension of credit from a lending institution when an account reaches zero, allowing the account holder to continue withdrawing money up to a certain limit.

Indirect Method

A way of reporting cash flows from operating activities by starting with net income and adjusting for non-cash transactions.

Direct Method

A way of presenting a cash flow statement where actual cash flows from operating activities are disclosed directly.

Operating Activities

Transactions and events related to the principal revenue-producing activities of an entity, reflected in its cash inflows and outflows.