For bonds payable, the cash interest paid in each interest period is:
A)Not the same amount when the stated and yield interest rates are different.
B)Different depending upon the date of sale.
C)The same amount regardless of whether the bond was sold at par, a discount, or a premium.
D)Dependent on the initial amount of accrued interest.

Question

Quizplus · Accepted Answer

The cash interest paid for bonds payable is determined by the bond's face value and the stated (or coupon) interest rate, which remains the same throughout the life of the bond, regardless of whether the bond was sold at par, a discount, or a premium.

For Bonds Payable, the Cash Interest Paid in Each Interest