The Discount on a Bonds Payable Becomes

question 148

Multiple Choice

The discount on a bonds payable becomes:

• A)additional interest expense in only the year the bonds are issued.
• B)additional interest expense over the life of the bonds.
• C)a reduction in interest expense in only the year the bonds mature.
• D)a reduction in interest expense over the life of the bonds.

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Definitions:

Total Output

The combined quantity of production or services produced by an entity in a given period.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Variable Costs

Expenses that change in proportion to the activity of a business, such as materials and labor.

Marginal Cost

The incremental cost involved in creating an extra unit of a product or service.