Asked by Máximo E. Peláez H. on Apr 25, 2024
Verified
Premium on Bonds Payable is a(n)
A) valuation account
B) contra account
C) accumulation account
D) adjunct account
Premium
An amount paid in excess of the normal or nominal value, often relating to the additional cost over the face value of securities or insurance charges beyond standard rates.
Bonds Payable
Long-term liabilities representing borrowed funds that a company is obliged to pay back with interest at specified times.
Valuation Account
An account used to adjust the carrying value of an asset or liability, such as an allowance for doubtful accounts or accumulated depreciation.
- Gain an understanding of the process of amortization and its implications for interest expenditure and liability valuation.
Verified Answer
KO
Katherine Ochoa7 days ago
Final Answer :
D
Explanation :
Premium on Bonds Payable is an adjunct account that represents the excess of the amount received from the sale of bonds over their face value. It is added to the Bonds Payable account to arrive at the total liability to be reported on the balance sheet.
Learning Objectives
- Gain an understanding of the process of amortization and its implications for interest expenditure and liability valuation.