When an auditor observes that the recorded interest expense seems to be excessive inrelation to the balance in the bonds payable account, the auditor might suspect that(1) discount on bonds payable is understated.(2) bonds payable are understated.(3) bonds payable are overstated.(4) premium on bonds payable is overstated

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A: Part 1:   Workings:

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A:

Q: The gain on early retire

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A:

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Fraud

Fraud in accounting is the planned manipulation of financial documents to make a false appearance of corporate financial health. Moreover, it includes an employee, accountant, or the company itself misleading investors and shareholders.