Question 1

Interest expense on an interest-bearing note is

Accepted Answer

A)  always equal to zero. 
B)  accrued over the life of the note. 
C)  only recorded at the time the note is issued. 
D)  only recorded at maturity when the note is paid. 
A)  always equal to zero. 
B)  accrued over the life of the note. 
C)  only recorded at the time the note is issued. 
D)  only recorded at maturity when the note is paid.

Question 2

The entry to record an installment payment on a long-term note payable is

Accepted Answer

A)  Mortgage Payable Cash 
B)  Interest Expense Cash 
C)  Mortgage Payable Interest Expense
Cash 
D)  Bonds Payable Cash 
A)  Mortgage Payable Cash 
B)  Interest Expense Cash 
C)  Mortgage Payable Interest Expense
Cash 
D)  Bonds Payable Cash

Question 3

On January 1, 2018, Focus Corporation issued $600,000, 6%, 5-year bonds at face value. Interest is payable annually on January 1.
Instructions
Prepare journal entries to record the
(a) Issuance of the bonds.
(b) Accrual of interest on December 31.
(c) Payment of interest on January 1, 2019.

Accepted Answer

The answer of On January 1, 2018, Focus Corporation issued...

Question 4

Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer.

Accepted Answer

A) True 
 B)False

Question 5

The relationship between current liabilities and current assets is

Accepted Answer

A)  useful in determining income. 
B)  useful in evaluating a company's liquidity. 
C)  called the matching principle. 
D)  useful in determining the amount of a company's long-term debt. 
A)  useful in determining income. 
B)  useful in evaluating a company's liquidity. 
C)  called the matching principle. 
D)  useful in determining the amount of a company's long-term debt.

Question 6

Unearned Rent Revenue is

Accepted Answer

A)  a contra account to Rent Revenue. 
B)  a revenue account. 
C)  reported as a current liability. 
D)  debited when rent is received in advance. 
A)  a contra account to Rent Revenue. 
B)  a revenue account. 
C)  reported as a current liability. 
D)  debited when rent is received in advance.

Question 7

Premium on Bonds Payable

Accepted Answer

A)  has a debit balance. 
B)  is a contra account. 
C)  is considered to be a reduction in the cost of borrowing. 
D)  is deducted from bonds payable on the balance sheet. 
A)  has a debit balance. 
B)  is a contra account. 
C)  is considered to be a reduction in the cost of borrowing. 
D)  is deducted from bonds payable on the balance sheet.

Question 8

A corporation issues $500,000, 8%, 5-year bonds on January 1, 2018, for $479,000. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2018's adjusting entry is

Accepted Answer

A)  $44,200. 
B)  $40,000. 
C)  $35,800. 
D)  $4,200. 
A)  $44,200. 
B)  $40,000. 
C)  $35,800. 
D)  $4,200.

Question 9

The board of directors may authorize more bonds than are issued.

Accepted Answer

A) True 
 B)False

Question 10

219. Silk Company issued $500,000 of 7%, 10-year bonds on its interest date for $431,850 to yield an effective annual rate of 9%. The effective-interest method of amortization is to be used. Interest is paid annually. What amount of discount (to the nearest dollar) should be amortized for the first interest period?

Accepted Answer

A)  $4,770 
B)  $6,133 
C)  $7,732 
D)  $3,867 
A)  $4,770 
B)  $6,133 
C)  $7,732 
D)  $3,867

Question 11

If bonds sell at a premium, the interest expense recognized each year will be greater than the contractual interest rate.

Accepted Answer

A) True 
 B)False

Question 12

The contractual interest rate is always equal to the market interest rate on the date that bonds are issued.

Accepted Answer

A) True 
 B)False

Question 13

The statement that "Bond prices vary inversely with changes in the market interest rate" means that if the

Accepted Answer

A)  market interest rate increases, the contractual interest rate will decrease. 
B)  contractual interest rate increases, then bond prices will go down. 
C)  market interest rate decreases, then bond prices will go up. 
D)  contractual interest rate increases, the market interest rate will decrease. 
A)  market interest rate increases, the contractual interest rate will decrease. 
B)  contractual interest rate increases, then bond prices will go down. 
C)  market interest rate decreases, then bond prices will go up. 
D)  contractual interest rate increases, the market interest rate will decrease.

Question 14

The market rate of interest for a bond issue which sells for more than its face value is

Accepted Answer

A)  independent of the interest rate stated on the bond. 
B)  higher than the interest rate stated on the bond. 
C)  equal to the interest rate stated on the bond. 
D)  less than the interest rate stated on the bond. 
A)  independent of the interest rate stated on the bond. 
B)  higher than the interest rate stated on the bond. 
C)  equal to the interest rate stated on the bond. 
D)  less than the interest rate stated on the bond.

Question 15

Neither corporate bond interest nor dividends are deductible for tax purposes.

Accepted Answer

A) True 
 B)False

Question 16

Horton Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,500. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be

Accepted Answer

A)  $480,000. 
B)  $479,500. 
C)  $476,000. 
D)  $475,500. 
A)  $480,000. 
B)  $479,500. 
C)  $476,000. 
D)  $475,500.

Question 17

Liabilities are classified on the balance sheet as current or

Accepted Answer

A)  deferred. 
B)  unearned. 
C)  long-term. 
D)  accrued. 
A)  deferred. 
B)  unearned. 
C)  long-term. 
D)  accrued.

Question 18

If bonds are issued at a premium, the carrying value of the bonds will be greater than the face value of the bonds for all periods prior to the bond maturity date.

Accepted Answer

A) True 
 B)False

Question 19

BE 253
Queen Company issued bonds with a face amount of $2,000,000 in 2015. As of January 1, 2018, the balance in Discount on Bonds Payable is $6,000. At that time, Queen redeemed the bonds at 102.
Instructions
Assuming that no interest is payable, make the entry to record the redemption.

Accepted Answer

The answer of BE 253
Queen Company issued bonds with a...

Question 20

The interest charged on a $70,000, 2-month note payable, at the rate of 6%, would be

Accepted Answer

A)  $4,200. 
B)  $2,100. 
C)  $1,050. 
D)  $700. 
A)  $4,200. 
B)  $2,100. 
C)  $1,050. 
D)  $700.

Interest expense on an interest-bearing note is

The entry to record an installment payment on a long-term note payable is

On January 1, 2018, Focus Corporation issued $600,000, 6%, 5-year bonds at face value. Interest is payable annually on January 1. Instructions Prepare journal entries to record the (a) Issuance of the bonds. (b) Accrual of interest on December 31. (c) Payment of interest on January 1, 2019.

Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer.

The relationship between current liabilities and current assets is

Unearned Rent Revenue is

Premium on Bonds Payable

A corporation issues $500,000, 8%, 5-year bonds on January 1, 2018, for $479,000. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2018's adjusting entry is

The board of directors may authorize more bonds than are issued.

If bonds sell at a premium, the interest expense recognized each year will be greater than the contractual interest rate.

The contractual interest rate is always equal to the market interest rate on the date that bonds are issued.

The statement that "Bond prices vary inversely with changes in the market interest rate" means that if the

The market rate of interest for a bond issue which sells for more than its face value is

Neither corporate bond interest nor dividends are deductible for tax purposes.

Horton Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,500. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be

Liabilities are classified on the balance sheet as current or

If bonds are issued at a premium, the carrying value of the bonds will be greater than the face value of the bonds for all periods prior to the bond maturity date.

BE 253 Queen Company issued bonds with a face amount of $2,000,000 in 2015. As of January 1, 2018, the balance in Discount on Bonds Payable is $6,000. At that time, Queen redeemed the bonds at 102. Instructions Assuming that no interest is payable, make the entry to record the redemption.

The interest charged on a $70,000, 2-month note payable, at the rate of 6%, would be

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

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Exam 10: Liabilities

Interest expense on an interest-bearing note is

The entry to record an installment payment on a long-term note payable is

On January 1, 2018, Focus Corporation issued $600,000, 6%, 5-year bonds at face value. Interest is payable annually on January 1. Instructions Prepare journal entries to record the (a) Issuance of the bonds. (b) Accrual of interest on December 31. (c) Payment of interest on January 1, 2019.

Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer.

The relationship between current liabilities and current assets is

Unearned Rent Revenue is

Premium on Bonds Payable

A corporation issues $500,000, 8%, 5-year bonds on January 1, 2018, for $479,000. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2018's adjusting entry is

The board of directors may authorize more bonds than are issued.

If bonds sell at a premium, the interest expense recognized each year will be greater than the contractual interest rate.

The contractual interest rate is always equal to the market interest rate on the date that bonds are issued.

The statement that "Bond prices vary inversely with changes in the market interest rate" means that if the

The market rate of interest for a bond issue which sells for more than its face value is

Neither corporate bond interest nor dividends are deductible for tax purposes.

Horton Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,500. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be

Liabilities are classified on the balance sheet as current or

If bonds are issued at a premium, the carrying value of the bonds will be greater than the face value of the bonds for all periods prior to the bond maturity date.

BE 253 Queen Company issued bonds with a face amount of $2,000,000 in 2015. As of January 1, 2018, the balance in Discount on Bonds Payable is $6,000. At that time, Queen redeemed the bonds at 102. Instructions Assuming that no interest is payable, make the entry to record the redemption.

The interest charged on a $70,000, 2-month note payable, at the rate of 6%, would be

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters