In the amortization schedule for premium on bonds payable, [choose the incorrect one] the carrying amount of the notes payable declines eventually to face amount the total effective interest over the term of maturity is equal to the amount of the premium plus the total cash interest paid the interest expense is less with each successive interest payment the reduction in the premium is more with each successive payment

In the amortization schedule for premium on bonds payable, [choose the incorrect one] the carrying amount of the notes payable declines eventually to face amount the total effective interest over the term of maturity is equal to the amount of the premium plus the total cash interest paid the interest expense is less with each successive interest payment the reduction in the premium is more with each successive payment

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

39. Help me selecting the right answer. Thank you
Which of the following statements is true?a. When the interest rate increases, the present value of asingle amount decreases.b. When the number of interest periods increases, thepresent value of a single amount increases.c. When the interest rate increases, the present value of anannuity increases.d. None of the above are true.
True or false 1. The trend of the balance of the discount on note payable during the term of the non-interest bearing note is decreasing. 2. The note payable account will be credited at its present value upon acquisition of a property if the note issued was non-interest bearing. 3. The carrying amount of the note payable is the same all through out the term of an interest bearing note .
When the market interest rate on a short-term note receivable is greater than the stated rate, ________. Group of answer choices the present value of the note is greater than its stated value the stated value of the note is greater than its face value the stated value of the note is less than its face value the present value of the note is less than its face value
1. If bonds are sold at a discount and the straight-line method of amortization is used, interest expense in earlier years will: (A) Exceed what is would have been had the effective interest rate method of amortization been used. (B) Be less than what it would have been had the effective interest rate method of amortization been used. (C) Be the same as it would have been had the effective interest rate method of amortization been used. (D) None of the above.
Indicate how to present and analyze liabilities and contingencies.
The time value of money is used in calculating bond prices because: Group of answer choices A - The company might choose to repay the bonds prior to their maturity date B - Bond investors receive future payments and purchase bonds with current dollars C - The amount to be repaid at maturity will change as market rates change D - Cash interest payments to bondholders will change as market rates change
22) The effective interest rate method of amortizing bonds allocates the same amount of interest expense to each period. TRUE FALSE
Yu.4
Question 21 If an issuer retires a debt issue before its maturity, the amount paid to do so is called the: A) sinking fund amount. B the discount. Ⓒ par or face amount. D amortized payoff. E call price.
The maturity value of a note receivable is equal to the sum of the face amount of the note O plus the interest O plus nothing else O none of these answers are correct Ominus the interest
Use of the effective-interest method to amortize bond premiums and discounts results in O a smaller amount of interest income over the life of the bond issue than would result from the use of the straight-line method. a varying amount being recorded as interest income from period to period. O a variable rate of return on the book value of the investment. O a greater amount of interest income over the life of the bond issue than would result from the use of the straight-line method.