At the time a bond was sold at face value, the entire amount of interest over the life of the bond was recorded as an expense and a liability. This error would cause:

Question

Quizplus · Accepted Answer

Recording the entire amount of interest over the life of the bond as an expense and a liability at the time the bond was sold would cause the period's net income to be understated because expenses would be overstated in that period.

At the Time a Bond Was Sold at Face Value