Which of the Following Statements Incorrectly Describes the Accounting for Bonds

question 68

Multiple Choice

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

• A) The market rate of interest is less than the stated interest rate.
• B) The interest expense over the life of the bonds will be less than the cash interest payments.
• C)The present value of the bonds' future cash flows is less than the bonds' maturity value.
• D)The book value of the bond liability decreases when interest payments are made on the due dates.

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