Which of the Following Is TRUE of a Discount on Debentures

question 22

Multiple Choice

Which of the following is TRUE of a discount on debentures payable?

• A)A discount on debentures payable is added to the debentures payable balance and shown with non- current liabilities on the balance sheet.
• B)A discount on debentures payable is subtracted from the debentures payable balance and shown with the current liabilities on the balance sheet.
• C)A discount on debentures payable is subtracted from the debentures payable balance and shown with non- current liabilities on the balance sheet.
• D)A discount on debentures payable is added to the debentures payable balance and shown with owners' equity on the balance sheet.

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Definitions:

Prepaid Insurance

An asset account that represents the cost of insurance paid in advance, which is expensed over the period the insurance coverage pertains to.

Account Group

A classification system used in accounting to organize similar accounts together, facilitating the management and reporting of financial information.

Interest Revenue

Income that a company earns from its investments in interest-bearing accounts or securities like bonds, loans, or savings.

T Account

A graphical representation of a ledger account used in accounting to depict the effects of transactions on account balances.