A Company Prepared the Following Journal Entry: Cash
Discount on Bonds

Multiple Choice

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

A) Total liabilities increase by the amount of the credit to bonds payable.
B) Discount on bonds payable is reported on the balance sheet as a contra-liability account.
C) Assets increase by the amount of the debit to cash.
D) The cash inflow (debit) is reported as a cash flow from financing activities.