The Normal Balance of the Premium on Bonds Payable Account

question 79

Multiple Choice

The normal balance of the premium on bonds payable account and the discount on bonds payable are respectively:

• A)debit, credit.
• B)credit, credit.
• C)debit, debit.
• D)credit, debit.

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Definitions:

Operating Working Capital

The difference between a company's current assets and current liabilities, excluding short-term debt. It reflects the funds that a business requires for day-to-day operations.

Effective Annual Cost

The total cost of borrowing on an annual basis, including interest and any fees, expressed as a percentage of the loan amount.

Trade Credit Terms

Trade credit terms are the conditions agreed upon between a buyer and seller regarding the payment for goods or services, including the repayment period and any discounts for early payment.

Discount

The reduction in the price of goods or services, usually offered to prompt sales or because the product is damaged, outdated, or in less demand.