Amortizing a bond discount:
A) Allocates a portion of the total discount to interest expense each interest period.
B) Increases the market value of the Bonds Payable.
C) Decreases the Bonds Payable account.
D) Decreases interest expense each period.
E) Increases cash flows from the bond.

Question

Quizplus · Accepted Answer

Amortizing a bond discount involves allocating a portion of the total discount to interest expense each interest period. This results in an increase in the interest expense and a decrease in the carrying value of the bond. Therefore, choice A is the correct answer. Choices B, C, D, and E are incorrect as they do not accurately describe the effects of amortizing a bond discount.

Amortizing a Bond Discount