Indicate whether each of the following statements about bonds payable is true or false.________ a) Premium on Bonds Payable is recorded when bonds are issued at less than their face value.________ b) Premium on Bonds Payable is a liability account.________ c) The balance in the Discount on Bonds Payable account increases liabilities.________ d) Discount on Bonds Payable is an expense account.________ e) A discount on bonds payable occurs when the stated interest rate on the bonds  is less than the market or effective interest.

What will be an ideal response?


a) F b) T c) F d) F e) T

a) This is false. Premium on Bonds Payable is recorded when bonds are issued for more than their face value.
b) This is true. Premium on Bonds Payable is a liability account, while Discount on Bonds Payable is a contra-liability account.
c) This is false. The balance in Discount on Bonds Payable reduces liabilities. It is a contra-liability.
d) This is false. Discount on Bonds Payable is a contra-liability, not an expense account.
e) This is true. Issuing bonds with a stated rate lower than the market rate results in a discount.

Business

You might also like to view...

Simple interest on a $25,000, 8%, 18-month note is

A) $22,000. B) $23,000. C) $3,000. D) $2,000.

Business

When designing the data collection activity, which type of data should be avoided?

a. data that is relevant b. data that is efficient c. data that is redundant d. data that is accurate

Business

Which of the following long-lived assets presents the most difficult in determining its cost?

a. Equipment. b. Inventory. c. Patent. d. All the above are equally difficult in determining cost.

Business

After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet, the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net Loss

Indicate whether the statement is true or false

Business