The bond interest expense reflected on the income statement should reflect an amount based on the
A)effective interest rate
B)stated interest rate
C)nominal interest rate
D)face interest rate

Question

Quizplus · Accepted Answer

The effective interest rate is the actual interest rate paid on the bond, taking into account any discounts, premiums, or other costs associated with issuing or selling the bond. Therefore, the bond interest expense should reflect an amount based on the effective interest rate, rather than the stated, nominal, or face interest rate.

The Bond Interest Expense Reflected on the Income Statement Should