When Bonds Are Retired Prior to Their Maturity Date

question 105

Multiple Choice

When bonds are retired prior to their maturity date:

• A)GAAP has been violated.
• B)The issuing company probably will report an ordinary gain or loss.
• C)The issuing company probably will report an extraordinary gain or loss.
• D)The issuing company will report a non-operating gain or loss.

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Definitions:

Profit Amount

The financial gain realized when the amount earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Shut-Off Valve

A type of valve designed to cut off the flow of liquids or gases within a pipeline system.

Household Damage

Damage or harm caused to the structure, contents, or occupants of a house due to various factors such as accidents, natural disasters, or wear and tear.

Water Supply

The system or process involved in providing water to meet agricultural, residential, industrial, and all other needs of a population.