When Bonds Are Issued at a Discount and the Effective

question 1

Multiple Choice

When bonds are issued at a discount and the effective interest method is used for amortization,at each interest payment date,the interest expense:

• A)Increases.
• B)Decreases.
• C)Remains the same.

---

Definitions:

Post-Closing Trial Balance

A list of all accounts and their balances after closing entries are made, showing only balance sheet accounts.

Temporary Accounts

Accounts that are closed at the end of each accounting period. These include revenue, expense, and dividend accounts.

Permanent Accounts

Accounts that carry their ending balances over to the next accounting period and are not closed out.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.