A discount on bonds payable:

A) Occurs when a company issues bonds with a contract rate less than the market rate.
B) Occurs when a company issues bonds with a contract rate more than the market rate.
C) Increases the Bond Payable account.
D) Decreases the total bond interest expense.
E) Is not allowed in many states to protect creditors.

Discount on Bonds Payable

This term refers to the difference between a bond's face value and its selling price when the bond is sold for less than its face value.

Contract Rate

The agreed-upon interest rate specified in a contract, particularly relevant in loans and financing agreements.

Market Rate

The current price or interest rate at which goods, services, or securities are bought and sold in a competitive marketplace.