Which of the Following Is TRUE of a Premium on Bonds

question 29

Multiple Choice

Which of the following is TRUE of a premium on bonds payable?

• A) A premium on bonds payable is added to the bonds payable balance and shown with long-term liabilities on the balance sheet.
• B) A premium on bonds payable is added to the bonds payable balance and shown with owner's equity on the balance sheet.
• C) A premium on bonds payable is subtracted from the bonds payable balance and shown with long-term liabilities on the balance sheet.
• D) A premium on bonds payable is subtracted from the bonds payable balance and shown with the current liabilities on the balance sheet.

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Definitions:

Drawer

The party that writes and signs a negotiable instrument, such as a check, instructing a drawee (often a bank) to pay a specified sum to a payee.

Draft

A preliminary version of a document, plan, or proposal that is subject to revision and refinement.

Order

A binding decision rendered by a judge.

Joint Payees

People who are collectively named to receive payment or performance as stipulated in a contract or agreement.