In reference to the Discount on Bonds Payable and Premium on Bonds Payable accounts, which statement is true?

• A.The Discount on Bonds Payable account is amortized by a credit entry each period.
• B.The Discount on Bonds Payable account is a contra asset.
• C.As the Premium on Bonds Payable account is amortized each period, the Interest Expense account is increased to the amount it would have been, had the bonds been sold at par.

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Two normal distributions, X and Y, have means of 10% and 15% respectively. What is the mean of the following linear combination: 2X + 3Y?

• A.62.5%
• B.65%
• C.31.3%

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Which of the following is INCORRECT concerning medium term notes?

• A.They have maximum maturities of up to 15 years.
• B.They are shelf-registered.
• C.They were originally meant to bridge the funding gap between commercial paper and long-term bonds.

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On the same test, Tom scored at the 87th percentile, and Bill scored at the 73rd. This means

• A.Tom scored 14 more points than Bill.
• B.14% of those taking the test got scores ranging between Tom's and Bill's.
• C.Tom is 14% better than Bill.

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Why would a firm use accelerated depreciation for tax purposes and straight-line for financial reporting?

• A.This reduces current taxes and increases accounting income.
• B.It is required by federal law.
• C.This always increases stock price, which always increases management compensation.

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