A Deficit Occurs When a Company Has Reoccurring Losses And/or

question 109

True/False

A deficit occurs when a company has reoccurring losses and/or declares dividends in excess of retained earnings.

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Definitions:

Discounted Bond

A bond sold for less than its face value due to prevailing interest rates being higher than the bond's coupon rate.

Amortized

The process of gradually writing off the initial cost of an asset over a period of time or spreading out a loan payment.

Discount on Bonds Payable

The difference between the bonds' par (or face) value and their lower selling price, representing additional interest expense to the issuer over the term of the bonds.

Bond Interest Payable

A liability account that records the amount of interest due on bonds that have not yet been paid to bondholders.