Which of the Following Statements Incorrectly Describes the Accounting for Bonds

Multiple Choice

Which of the following statements incorrectly describes the accounting for bonds that were issued at a premium?

A) The market rate of interest is less than the stated interest rate.
B) The interest expense over the life of the bonds will be less than the cash interest payments.
C) The present value of the bonds' future cash flows is less than the bonds' maturity value.
D) The book value of the bond liability decreases when interest payments are made on the due dates.