Your company issued bonds at a discount. Which of the following statements is NOT true?
A) The contra liability account, Discount on Bonds Payable, is amortized each year by shifting part of its balance to interest expense.
B) As the current date approaches the maturity date, the carrying value of the bond approaches the face value of the bond.
C) At the date of issuance, the market interest rate was higher than the stated interest rate.
D) The account used to record the discount is a normal credit balance account.

Question

Quizplus · Accepted Answer

The account used to record the discount on bonds payable is a contra liability account, which has a normal debit balance, not a credit balance.

Your Company Issued Bonds at a Discount