Using the effective-interest method of amortization,interest expense is based on the net liability at the beginning of the current period times the effective interest rate for the interest period.

Question

Quizplus · Accepted Answer

This statement is true. The effective-interest method of amortization involves calculating interest expense based on the net liability at the beginning of the period and the effective interest rate for that period. This method is used to gradually reduce the discount or premium on a bond or other debt instrument over its lifetime.

Using the Effective-Interest Method of Amortization,interest Expense Is Based on the Net