Which of the following is true of a Premium on Bonds Payable account?
A)It is added to the Bonds Payable balance and shown with long-term liabilities on the balance sheet.
B)It is added to the Bonds Payable balance and shown with owner's equity on the balance sheet.
C)It is subtracted from the Bonds Payable balance and shown with long-term liabilities on the balance sheet.
D)It is subtracted from the Bonds Payable balance and shown with the current liabilities on the balance sheet.

Question

Quizplus · Accepted Answer

A Premium on Bonds Payable account represents the excess amount received by a company over and above the face value of its bonds. This premium is added to the Bonds Payable balance and shown together as long-term liabilities on the balance sheet. Therefore, option A is correct.

Which of the Following Is True of a Premium on Bonds