Which of the Following Statements Regarding Bonds Payable Net of a Discount

question 16

Multiple Choice

Which of the following statements regarding bonds payable net of a discount or premium is not true?

• A)If a company records a discount or premium with the bonds payable in a single account called Bonds Payable,Net,it is using the simplified effective interest method of amortization.
• B)When bonds payable are accounted for net of a discount,the initial amount recorded in the Bonds Payable,Net account is the issue price of the bond.
• C)When the Simplified Approach (Effective-interest Method)of amortization is used,the balance in the Bonds Payable,Net account will increase as the bond approaches the maturity date.
• D)If a company issued bonds at their face value,the balance of Bonds Payable,Net account will always be equal to the face value of the bonds as long as the bonds are outstanding.

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Definitions:

Corporation's Bylaws

The written rules for conduct of a corporation, detailing the rights and obligations of the directors, officers, and shareholders.

Perpetrate A Fraud

The act of intentionally deceiving someone or a group in order to gain an unfair or illegal advantage, often financial.

Personally Liable

A legal term referring to an individual's responsibility to settle a debt or legal judgment from their personal assets.

Corporate Bonds

Debt securities issued by corporations to finance their operations, which typically pay periodic interest payments and return the principal at maturity.