Which of the Following Statements About Bond Accounting Under the Effective

question 47

Multiple Choice

Which of the following statements about bond accounting under the effective interest method is correct?

• A)The cash interest paid is calculated as the bond face value ´ the yield rate.
• B)The interest expense is calculated as the carrying value ´ the yield rate.
• C)The difference between the cash interest paid and the interest expense is added to the carrying value of bonds sold at a premium.
• D)The difference between the interest expense and the interest paid is deducted from the carrying value of bonds sold at a discount.

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Definitions:

Independent Variable

A variable that is manipulated or changed in an experiment to test its effects on the dependent variable.

Dependent Variable

In an experiment, the variable that is being tested and measured, expected to change as a result of manipulations to the independent variable.

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