Which of the Following Is True Regarding the Account Entitled

question 40

Multiple Choice

Which of the following is true regarding the account entitled Premium on Bonds Payable?

• A)It is an account that increases when amortization entries are made.
• B)It is an account that appears on the balance sheet of the issuer as a deduction from bonds payable.
• C)It is an account that decreases when amortization entries are made and its balance is equal to zero at the maturity date of the bond.
• D)It is a contra account with a normal debit balance.

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Definitions:

Benefits Accrue

The accumulation of advantages or positive results over time from an action or investment.

Purely Competitive

A market structure characterized by many participants offering identical products, where no single buyer or seller can influence the market price.

Economic Profits

The excess of total revenue over total costs, including both explicit and implicit costs, as calculated in economic theory.

Normal Profits

The minimum level of profit necessary for a company to remain competitive in the market, essentially covering opportunity costs but not generating excess profit.