Question

A municipal bond is purchased at a discount. Over the course of the life of the bond, the book value is increased while the customer holds the security. This is performed using which of the following accounting methods
A) This is referred to as marking up the security.
B) This occurs when we see the security appreciate in value.
C) This is referred to as accretion of the security.
D) This occurs when we amortize of the security.

Answer 1

Answer:

C) This is referred to as accretion of the security.

Explanation:

The security is amortized when the principal and interest is employed in paying down the debt.