Which of the following statements is true?
A) The corporation will have cash inflow when bonds are issued for an amount equal to, greater than, or less than the par value of the bonds.
B) The corporation will have to pay cash to bond investors when those investors demand to call the bonds.
C) The corporation will have an outflow of cash connected to an investing activity when interest is paid to bond investors.
D) An outflow of cash when convertible bonds are converted is a financing activity.

Question

Quizplus · Accepted Answer

A) When a corporation issues bonds, it receives cash from the investors who purchase the bonds. This cash inflow occurs regardless of whether the bonds are issued at par value, at a discount (less than par value), or at a premium (more than par value).

Which of the Following Statements Is True