Reference no: EM133010313

Problem 1: What statement is true?

Option 1: Bonds maturing at a specified single date are called ordinary bonds.

Option 2: Equity securities and debt securities differ only in their effect on a company's cash flow.

Option 3: One purpose in holding bonds as a long-term investment is to provide the investor a voting voice in the management of the issuing company.

Option 4: On bonds, the yield rate and the nominal rate of interest are always different.

Problem 2: The premium or discount on bonds purchased as a temporary investment generally reported on published financial statements as:

Option 1: as an integral part of the cost of the asset acquired (investment) and amortized over a period of not less than 60 months.

Option 2: as an integral part of the cost of the asset acquired (investment) until such time as the investment is sold.

Option 3: as expense or revenue in the period the bonds are purchased.

Option 4: as an integral part of the cost of the asset acquired (investment) and amortized over the period the bonds are expected to be held.