Using the Amortization Procedure, a Holder of the Debt Securities

question 101

Multiple Choice

Using the amortization procedure, a holder of the debt securities (the investor) records interest revenue each period by debiting the _____ and crediting _____ which after closing entries increases _____ The bonds are classified as held to maturity.

• A)Marketable Securities account; Interest Revenue; Retained Earnings
• B)Interest Revenue; Retained Earnings; Marketable Securities account
• C)Retained Earnings; Marketable Securities account; Interest Revenue
• D)Marketable Securities account; Interest Expense; Retained Earnings
• E)Common Stock account; Interest Expense; Retained Earnings

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Definitions:

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in its price.

Demand Schedule

A table that shows the quantity of a good that consumers are willing to purchase at different prices.

Total Revenues

The total amount of income generated by the sale of goods or services before any expenses are subtracted.

Perfectly Inelastic

A market demand situation where the quantity demanded remains constant regardless of changes in price.