Amortization of a Bond Discount

question 119

Multiple Choice

Amortization of a bond discount

• A)Decreases the Bonds Payable account
• B)Increases the Bonds Payable account
• C)Allocates the amount of the discount over the life of the bond
• D)Creates a Discount Payable account
• E)None of these

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Definitions:

Absorption Costing

An approach in financial accounting that wraps all expenses incurred in manufacturing including direct materials, direct labor, and all overhead (variable and fixed), into the product's cost.

Net Operating Income

The total revenue of a business minus its operating expenses, excluding taxes and interest.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, labor, and both variable and fixed overhead - in the cost of a product.

Net Operating Income

An entity’s income after all operating expenses have been deducted from total revenue, excluding taxes and interest charges.