Question

The Discount on Bonds Payable account has a debit balance and, as such, should be reported as:

a. Either as a contra asset account or a deferred charge.
b. A contra asset account.
c. A deferred charge.
d. A contra liability account

Answer 1

The Discount on Bonds Payable account has a debit balance and should be reported as a contra liability account.

Step-by-step explanation:

The Discount on Bonds Payable account has a debit balance and should be reported as a contra liability account. In accounting, a contra account is an account that is paired with and offsets a related account. Since the Bonds Payable account represents a liability that the company owes, the Discount on Bonds Payable account is used to track the amount of discount on that liability.