The Discounts on Bonds Payable account is classified as a(n):
A) assets.
B) contra-liabilities.
C) expenses.
D) contra-assets.

Question

Quizplus · Accepted Answer

The Discounts on Bonds Payable account is classified as a contra-liability account because it represents a reduction in the overall liabilities of the company (bonds payable). It is used to reduce the carrying value of the bonds payable to reflect the discount received by bond investors at the time of issuance.

The Discounts on Bonds Payable Account Is Classified as A(n)