A Company Prepared the Following Journal Entry: Cash $\quad$

Multiple Choice

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

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