Which of the Following Is True of a Premium on Bonds

question 51

Multiple Choice

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

• A) It is a contra-stockholders' equity account.
• B) It is an account that appears only on the books of the investor.
• C) It increases when amortization entries are made until it reaches its maturity value.
• D) It decreases when amortization entries are made until its balance reaches zero at the maturity date.

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Definitions:

Critical Problems

significant, urgent issues or challenges that require immediate attention and resolution to prevent adverse outcomes.

Certainty

The state of being completely confident or having an absolute conviction about something, without doubt.

Risk and Uncertainty

Refers to situations where the outcomes or consequences of actions are unknown, with risk implying some knowledge of probability and uncertainty indicating a complete lack of predictability.

Personal Judgments

Opinions or decisions formed by individuals based on personal feelings, tastes, or opinions, often without external input or influence.