Over the term of a bond,the amortization of the premium on bonds payable:
A)increases the amount of cash paid to bondholders annually.
B)decreases the amount of cash paid to bondholders annually.
C)increases interest expense.
D)decreases interest expense.

Question

Quizplus · Accepted Answer

The amortization of the premium on bonds payable decreases interest expense over the term of the bond because the premium is essentially an amount paid above the bond's face value, which offsets the interest payments over the life of the bond.

Over the Term of a Bond,the Amortization of the Premium