A Company Prepared the Following Journal Entry: Interest Expense $\quad$

Multiple Choice

A company prepared the following journal entry: Interest expense
$\quad$$\quad$ Discount on bonds payable
$\quad$$\quad$ Cash Which of the following statements correctly describes the effect of this journal entry on the financial statements?

A) The bonds payable book value increases by the amount of the credit to discount on bonds payable.
B) The bonds payable book value decreases by the amount of the credit to cash.
C) Stockholders' equity decreases by the amount of the credit to cash.
D) The cash payment is reported as a cash flow from financing activities.