Interest Expense Is Computed Annually When a Bond Is Issued

question 89

Multiple Choice

Interest expense is computed annually when a bond is issued for other than its face value.For a bond issued at a premium,how will this component change under the effective interest method as the bond approaches maturity?

• A)Decrease
• B)Increase
• C)Remain constant
• D)Not enough information given to decide

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Definitions:

Economic Activity

The actions that involve the production, distribution, and consumption of goods and services in an economy.

Marginal Analysis

An examination of the benefits and costs of one additional unit of change.

Economic Individuals

Persons or entities that make decisions to maximize satisfaction or profits, based on the principles of economics.

Bit More

A small additional amount or degree.