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1.As a loan is paid off, the debt portion of the fixed payment increases debt and interest portions do not change each interest period monthly payment increases interest potion of the fixed payment increases

1.As a loan is paid off, the debt portion of the fixed payment increases debt and interest portions do not change each interest period monthly payment increases interest potion of the fixed payment increases

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1.As a loan is paid off, the

  • debt portion of the fixed payment increases
  • debt and interest portions do not change each interest period
  • monthly payment increases
  • interest potion of the fixed payment increases

2.When a bond payable is measured using the fair value model, the interest expense is computed by multiplying the

  • face value and nominal rate
  • present value and effective rate
  • face value and effective rate
  • present value and nominal rate

3.Which is true when a bond payable is issued at a discount?

  • Proceeds from issuance is lower than the face amount.
  • The nominal rate is higher than the effective rate.
  • The carrying amount of the bonds decreases each period.
  • The interest paid is higher than the interest expense.
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