The Discount on Bonds Payable account is a(n):
A)Liability.
B)Contra liability.
C)Expense.
D)Contra expense.
E)Contra equity.

Question

Quizplus · Accepted Answer

The Discount on Bonds Payable is a contra liability account because it reduces the overall liability of the company. The face value of a bond is typically the amount paid back to investors at maturity, and the discount on the bond represents the difference between the face value and the amount actually received by the company. Therefore, the Discount on Bonds Payable represents a reduction in the liability owed to bondholders.

The Discount on Bonds Payable Account Is A(n)