If Bonds Have Been Issued at a Premium, Then Over

question 43

Multiple Choice

If bonds have been issued at a premium, then over the life of the bonds the

• A) carrying amount of the bonds will decrease.
• B) carrying amount of the bonds will increase.
• C) unamortized discount will increase.
• D) interest expense will remain unchanged.

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Definitions:

Notes Receivables

Financial assets representing a right to receive payments from debtors under the terms of written promissory notes.

Maturity Value

The amount to be received at the maturity of a financial instrument, typically including both the principal and interest.

Calculating Interest

The process of determining the interest payment on a loan or investment, based on the principal amount, rate, and time.

Dishonored Note

A promissory note that has not been paid by the maker at its maturity date, resulting in a default.