In Its 2016 Income Statement,WME Reported $11,000 of Interest Expense

question 55

Multiple Choice

In its 2016 income statement,WME reported $11,000 of interest expense on its outstanding bonds.During the year,WME paid its regular installments of $9,000 of interest in cash.In its reconciliation schedule,WME should:

• A)Show a $2,000 positive adjustment to net income under the indirect method for the decrease in bond premium.
• B)Show a $2,000 negative adjustment to net income under the indirect method for the decrease in bond premium.
• C)Show a $2,000 positive adjustment to net income under the indirect method for the decrease in bond discount.
• D)Show a $2,000 negative adjustment to net income under the indirect method for the decrease in bond discount.

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Definitions:

Significantly Fewer

A term used to describe a noticeably smaller quantity or number of something.

Third-Party Firm

An external organization that provides services or products to another company, not directly connected to the primary business.

Outsourcing

The business practice of hiring a party outside a company to perform services or create goods that traditionally were performed in-house.