Which of the Following Statements Does Not Correctly Describe the Accounting

question 119

Multiple Choice

Which of the following statements does not correctly describe the accounting for bonds that were issued at a discount?

• A) The interest expense over the life of the bond exceeds the 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 amortization of the discount on bonds payable account 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.When bonds are issued at a discount, their book value increases over time and eventually reach the bonds' maturity value. Interest expense increases because the book value increases. The amortization of discount on bonds payable is the difference between the increasing interest expense and the constant cash interest payment.

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Definitions:

Null Hypothesis

The hypothesis that assumes no significant difference or relationship exists between specified populations or parameters.

Sample Size

The number of observations or data points that are collected from a subset of a larger population for the purposes of statistical analysis.

Pragmatic Concerns

Practical considerations or limitations that affect how research or a policy can be implemented.

Type II Error

A statistical error that occurs when failing to reject a false null hypothesis; also known as a false negative.