Which of the Following Statements Correctly Describes the Accounting for Bonds

question 49

Multiple Choice

Which of the following statements correctly describes the accounting for bonds that were issued at a premium?

• A)The interest expense over the life of the bond is less than the cash interest payments.
• B)The interest expense over the life of the bonds increases as the bonds mature when the effective interest method is used.
• C)The amortization of the premium on bonds payable account decreases as the bonds mature when the effective interest method is used.
• D)The book value of the bond liability increases when interest payments are made on the due dates when the effective interest method of amortization is used.

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