A Debit to an Asset Account Indicates

question 3

Multiple Choice

A debit to an asset account indicates

• A) an error.
• B) a credit was made to a liability account.
• C) a decrease in the asset.
• D) an increase in the asset.

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Definitions:

Bond Premium

The additional amount over the face value that investors are willing to pay for a bond, typically because it offers a higher interest rate than the prevailing market rate.

Annual Interest Payment

The total amount of interest to be paid each year on a loan, bond, or other financial instrument.

Straight-line Method

A depreciation method that allocates an equal portion of the initial cost of an asset to each year of its useful life.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, accounting for time value of money.