Creative Products Company
The following question(s) are based on items that might appear on the balance sheet of a company like the Creative Products Company. Identify how each item would be most likely classified on its balance sheet.
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Refer to the information provided for Creative Products Company. Premium on Bonds Payable will appear as:
A) an addition to a long-term liability.
B) a revenue.
C) a long-term asset.
D) a contra-liability.

Question

Creative Products Company 
The following question(s) are based on items that might appear on the balance sheet of a company like the Creative Products Company. Identify how each item would be most likely classified on its balance sheet.
-
Refer to the information provided for Creative Products Company. Premium on Bonds Payable will appear as:
A) an addition to a long-term liability.
B) a revenue.
C) a long-term asset.
D) a contra-liability.

Quizplus · Accepted Answer

Premium on Bonds Payable is added to the Bonds Payable account on the balance sheet, increasing the carrying amount of the liability, thus it is an addition to a long-term liability.