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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Definitions:

Internals

Refers to individuals who primarily see themselves as responsible for the outcomes of their actions and events in their lives, often associated with a high internal locus of control.

Cautious

Characterized by a desire to avoid risks and potential problems, showing carefulness and prudence in actions and decisions.

Externally Oriented

Focusing on the external environment and external stimuli rather than internal thoughts and feelings.

Botswana

A landlocked country located in Southern Africa, known for its diverse ecosystems and wildlife.