As a discount on notes payable is amortized:
A)the carrying value of the note and interest expense are increased.
B)both the carrying value of the note is and interest expense are unchanged
C)the carrying value of the note decreases and interest expense increases
D)the carrying value of the note increases and the interest expense decreases

Question

Quizplus · Accepted Answer

Amortizing a discount on notes payable increases the carrying value of the note because the discount is gradually added to the principal amount over time. Additionally, interest expense increases because interest is calculated on the increasing carrying amount of the note.

As a Discount on Notes Payable Is Amortized