Which of the Following Statements Correctly Describes the Accounting for Bonds

question 11

Multiple Choice

Which of the following statements correctly describes the accounting for bonds that were issued at a premium?

• A)The interest expense over the life of the bond is less than the total cash interest payments.
• B)The interest expense over the life of the bonds increases as the bonds mature when the effective interest method is used.
• C)The amount of amortization of the premium on bonds payable decreases as the bonds mature when the effective interest method is used.
• D)The book value of the bond liability increases when interest payments are made on the due dates when the effective interest method of amortization is used.

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Definitions:

CPU

Central Processing Unit, the primary component of a computer that performs most of the processing inside a computer.

Stored Unit

A measured quantity of energy saved or reserved in a medium or system for future use.

Duplicate

To make an exact copy of something, creating a replica that shares the same characteristics as the original.

Data Files

Electronic files that store a collection of data, often organized in a structured format.