Which of the Following Statements About the Issuance of Bonds

question 113

Multiple Choice

Which of the following statements about the issuance of bonds at a discount is not correct?

• A)The contra liability account,Discount on Bonds Payable,is amortized each year by shifting part of its balance to interest expense.
• B)As the current date approaches the maturity date,the carrying value of the bond approaches the face value of the bond.
• C)At the date of issuance,the market interest rate was higher than the stated interest rate.
• D)The account used to record the discount is a normal credit balance account.

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Definitions:

Inflation Reduction

Efforts and policies aimed at decreasing the rate at which prices for goods and services rise.

Central Bank

The primary monetary authority of a country or region, responsible for regulating the money supply, issuing currency, and managing interest rates to ensure economic stability.

Fiscal Policy

Government adjustments in spending levels and tax rates to monitor and influence a nation's economy.

Lag

The time delay between the occurrence of one event and the occurrence of another event that is directly related to the first.