Question

57) Discount on Bonds Payable Select one: a. is a contra revenue account. b. is a...

57) Discount on Bonds Payable Select one: a. is a contra revenue account. b. is a contra liability account. c. is added to Bonds Payable to determine the carrying value of the bond. d. has a credit balance.

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Answer #1

Correct answer is option (b) is a contra liability account.

Explanation;

Contra liability account is such account in which there will be a debit balance. As we know that liability account have credit balance but discount on bonds payable have debit balance that is why it is a contra liability account.

Other options are incorrect because it is not a contra revenue account. It is deducted from Bonds Payable to determine the carrying value of the bond. It has a debit balance.

That is why correct answer is option (b).

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