Which of the Following Statements About Discount on Bonds Payable

question 184

Multiple Choice

Which of the following statements about discount on bonds payable is NOT true?

• A)Discount on bonds payable is a contra account to bonds payable.
• B)Subtracting the discount account from the bonds payable account yields the carrying amount of the bonds.
• C)Adding the discount account to the bonds payable account yields the carrying amount of the bonds.
• D)Discount on bonds payable decreases the company's liabilities.

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Definitions:

Opportunity Costs

The cost of an alternative that must be forgone to pursue a certain action. Put differently, the benefits you could have received by taking an alternative action.

WACC

Weighted Average Cost of Capital, the average rate of return a company is expected to pay to all its security holders, including equity and debt.

Calculate

The act of determining a value or amount by mathematical means, often to analyze financial or statistical data.

Borrowed

The act of receiving something, especially money, with the obligation to return it or its equivalent.