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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