Amortizing a Bond Discount

question 158

Multiple Choice

Amortizing a bond discount:

• A) Allocates a portion of the total discount to interest expense each interest period.
• B) Increases the market value of the Bonds Payable.
• C) Decreases the Bonds Payable account.
• D) Decreases interest expense each period.
• E) Increases cash flows from the bond.

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Definitions:

Offeror

An offeror is the party in a contract who makes an offer to enter into an agreement with another party, known as the offeree.

Offer Immediately

This term typically refers to a proposal or opportunity presented without delay.

Reasonably Definite Terms

A principle that a contract must be clear enough in its terms so that the obligations of each party can be understood and enforced.

Offer

A key factor in the agreement element of a contract; consists of the terms and conditions set by one party, the offeror, and presented to another party, the offeree.