QAEconomics › At the end of the accounting period, the owners of debt securities:
Q

At the end of the accounting period, the owners of debt securities:

A. Must report the dividend income accrued on the debt securities

B. Must retire the debt.

C. Must record a gain on loss on the interest income earned

D. Must accrue interest earned on the debt securities.

A

Answer: D. Must accrue interest earned on the debt securities.

Debt securities can be defined as financial assets that designate their owner to a series of interest payments. Debt securities, as opposed to equity securities, mandate the debtor to pay back the principal lent. The interest rate on a debt security is largely determined by the debtor’s apparent trustworthiness.

Therefore, at the end of the timeframe of the payment, the owner of the debt securities is expected to accumulate the interest he has received from the borrower.

3 years ago
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