121) The carrying value of bonds will decrease each interest period if the bonds were issued at a premium.
122) Using the effective-interest method of amortization, interest expense is based on the carrying amount of the bonds times the effective-interest rate for the interest period.
123) Earnings per share is the amount of a company's net income per share of its common shares.
124) The times interest earned ratio is calculated by taking interest expenses divided by net income.
125) The interest paid to a bond holder is tax deductible.
126) Trading on equity occurs when an organization earns more income on borrowed money than the related interest expenses.
127) An example of a postretirement benefit provided by a company is medical insurance for retired workers.
128) A defined contribution plan is one where the company promises the employee a specific monthly benefit upon retirement.
129) A defined benefit pension plan is one where the company promises the employee a specified monthly benefit upon retirement.
130) Accountants generally prefer operating leases.