A Company Prepared the Following Journal Entry: Which of the Following

question 22

Multiple Choice

A company prepared the following journal entry: Which of the following statements is correct?

• A)The book value of the bonds was less than the cash payment.
• B)The increase in stockholders' equity equals the loss on the bond retirement.
• C)The decrease in assets is greater than the decrease in liabilities and, as a result, stockholders' equity decreases.
• D)The net cash flow from financing activities decreases by the book value of the bonds payable.

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Definitions:

Directly Proportional

A relationship between two variables where if one increases, the other one also increases at a constant ratio.

Inversely Proportional

A relationship between two variables where when one variable increases, the other decreases at a rate that maintains the constant product of the two variables.

Power Source

A component or system that provides electrical power to a circuit or device.

Electrostatic Attraction

The force of attraction between oppositely charged particles.