As a Discount on Notes Payable Is Amortized

question 109

Multiple Choice

As a discount on notes payable is amortized:

• A)the carrying value of the note and interest expense are increased.
• B)both the carrying value of the note is and interest expense are unchanged
• C)the carrying value of the note decreases and interest expense increases
• D)the carrying value of the note increases and the interest expense decreases

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Definitions:

Solvency Analysis

An assessment of a company's ability to meet its long-term financial obligations.

Noncurrent Liabilities

Financial obligations of a company that are not due to be settled within one year, including long-term loans, bonds payable, and long-term lease obligations.

Current

In finance, "current" typically refers to assets and liabilities that are expected to be realized or settled within one year from the reporting date.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.