C . The effective-interest method produces a constant rate of return on the book value of the investment from period to period .
D . Amortization of a discount decreases from period to period .
18 ) Which of the following is NOT generally correct about recording a sale of a debt security before maturity date ?
A . The entry to amortize a premium to the date of sale includes a credit to the Premium on Investments in Debt Securities .
B . A gain or loss on the sale is NOT extraordinary . C . An entry must be made to amortize a discount to the date of sale .
D . Accrued interest will be received by the seller even though it is NOT an interest payment date .
19 ) Investments in debt securities should be recorded on the date of acquisition at
A . market value plus brokerage fees and other costs incident to the purchase .
B . face value plus brokerage fees and other costs incident to the purchase .
C . market value . D . lower of cost or market .
20 ) When an investor ‟ s accounting period ends on a date that does NOT coincide with an interest receipt date for bonds held as an investment , the investor must
A . make an adjusting entry to debit Interest Receivable and to credit Interest Revenue for the total amount of interest to be received at the next interest receipt date .