the loan. Over time, which -13. Installment notes call for equal payments over the term of of the following describes the amounts allocated to interest and erest expense increases and payment of principal remains the same. B) Interest expense increases and payment of principal decreases C) Interest expense decreases and payment of principal increases. D) Interest expense decreases and payment of principal remains the same. 14. The interest rate specified in the terms of the bond agreement is known as the A) Yield. B) Stated rate. C) Effective rate. D) Market rate. 15. Bonds that contain a provision that allows the issuing corporation to buy back the bonds prior to maturity are called A) Debenture bonds B) Convertible bonds. C) Secured bonds. D) Callable bonds. 16. Aqua Marine issued 10-year bonds at 98. When preparing the year end financial statements, Aqua's accountant failed to amortize the bond discount. What effect will the accountant's error have on Aqua's net income and bond carrying value, respectively? A) Overstated, understated B) Understated, understated C) Overstated, overstated D) Understated, overstated 17. Time Warner has 40,000 shares of common stock authorized. If 25,000 shares have been issued and 2,000 shares are held in treasury, what is the number of shares outstanding? A) 38,000. B) 17,000. C) 15,000 D) 23,000