Amortization of the Premium on Bonds Payable Is Subtracted from Net

question 28

Multiple Choice

Amortization of the premium on bonds payable is subtracted from net income in the reconciliation of net income to cash flows from operations because

• A) interest expense understates the cash paid for interest by the amount of the premium amortization.
• B) it reduces income without causing a cash outflow.
• C) it increases income without causing a cash flow.
• D) it is a financing cash outflow.

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Definitions:

Systematic Desensitization

A behavioral therapy technique used to reduce phobias and anxieties through gradual exposure to the feared object or situation accompanied by relaxation exercises.

Progressive Relaxation

A technique aimed at reducing stress and anxiety by tensing and then relaxing each muscle group in the body.

Aversive Conditioning

A method of behavior modification that involves the use of unpleasant stimuli to reduce or eliminate unwanted behavior.

Systematic Desensitization

A therapeutic technique used to reduce anxiety by gradually exposing the patient to the feared object or situation.