A Company Prepared the Following Journal Entry: Which of the Following

question 89

Multiple Choice

A company prepared the following journal entry: Which of the following statements correctly describes the effect of this journal entry on the financial statements?
Cash
Premium on bonds payable
Bonds payable

• A) Total liabilities increase by the amount of the debit to cash.
• B) Premium on bonds payable is reported on the balance sheet as a contra-liability account.
• C)Total liabilities increase by the amount of the credit to bonds payable.
• D)The credit to bonds payable is the amount reported as a cash flow from financing activities.

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Definitions:

Single-Phase Transformers

Transformers designed to operate on an electrical system using a single alternating current (AC) phase, commonly used in residential and light commercial applications.

Primary Line Voltage

The voltage applied to the primary winding of a transformer or the initial voltage in a power distribution line before any step up or step down transformations.

Secondary Line Voltage

The voltage present in the output (secondary) side of a transformative device, typically less than the input (primary) voltage.

Turns Ratio

The ratio of the number of turns in the primary winding to the number of turns in the secondary winding of a transformer.