Which of the Following Statements About Bonds Payable Net of a Discount

question 216

Multiple Choice

Which of the following statements about bonds payable net of a discount or premium is not correct?

• A) If a company records a discount or premium with the bonds payable in a single account called Bonds Payable, Net, it is using simplified effective-interest amortization.
• B) When bonds payable are accounted for net of a discount, the initial amount recorded in the Bonds Payable, Net account is the issue price of the bond.
• C) When simplified effective-interest amortization is used, the balance in the Bonds Payable, Net account will increase as the bond approaches the maturity date.
• D) If a company issued bonds at their face value, the balance of Bonds Payable, Net account will always be equal to the face value of the bonds as long as the bonds are outstanding.

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