An Account That Would Be Increased by a Debit Is

question 59

Multiple Choice

An account that would be increased by a debit is:

• A) Cash.
• B) Fees Earned.
• C) Capital.
• D) Accounts Payable.

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Definitions:

Effective Interest Rate Method

The method of amortizing discounts and premiums that provides for a constant rate of interest on the carrying amount of the bonds at the beginning of each period; often called simply the “interest method.”

Constant Dollar

A term used in economics to describe a monetary value that has been adjusted for inflation, thereby facilitating comparison of purchasing power over different periods.

Interest Expense

The cost incurred by an entity for borrowed funds, often reported on the income statement as a non-operating expense.

Unamortized Premium

The portion of the bond premium that has not yet been amortized (expensed) over the life of the bond.