Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-Which of the following is true of a premium on bonds payable?

Question

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. 
-Which of the following is true of a premium on bonds payable?

Quizplus · Accepted Answer

A premium on bonds payable is an account that represents the excess amount paid by investors on a bond issue above the face value of the bond. This excess amount is amortized over the life of the bond, reducing the premium each year until its balance reaches zero at the maturity date. Therefore, the correct choice is D, as the premium decreases when amortization entries are made until its balance reaches zero at the maturity date.

Use the Present Value and Future Value Tables Included in Appendix