Question 1

The carrying value of bonds will equal the market price

Accepted Answer

A) at the close of every trading day. 
B) at the end of the fiscal period. 
C) on the date of issuance. 
D) every six months on the date interest is paid. 
A) at the close of every trading day. 
B) at the end of the fiscal period. 
C) on the date of issuance. 
D) every six months on the date interest is paid.

Question 2

Madson Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 90,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

Accepted Answer

The answer of Madson Company typically sells subscriptions on an...

Question 3

The following partial amortization schedule is available for Courtney Company who sold $750,000, five-year, 10% bonds on January 1, 2017 for $780,000 and uses annual straight-line amortization. $\text { BOND AMORTIZATION SCHEDULE }$
$\begin{array}{|l|c|c|c|c|c|}
\hline \text { Interest Periods } & \begin{array}{c}
\text { Interest } \
\text { to be paid }
\end{array} & \begin{array}{c}
\text { Interest } \
\text { expense }
\end{array} & \begin{array}{c}
\text { Premium } \
\text { Amortization }
\end{array} & \begin{array}{c}
\text { Unamortized } \
\text { Premium }
\end{array} & \begin{array}{c}
\text { Bond Carrying } \
\text { Value }
\end{array} \
\hline \text { January 1,2017 } & & & & \$ 30,000 & \$ 780,000 \
\hline \text { January } 1,2018 & \text { (i) } & \text { (ii) } & \text { (iii) } & \text { (iv) } & (\mathrm{v}) \
\hline
\end{array}$ Which of the following amounts should be shown in cell (i)?

Accepted Answer

A) $78,000 
B) $81,000 
C) $75,000 
D) $15,000 
A) $78,000 
B) $81,000 
C) $75,000 
D) $15,000

Question 4

All of the following statements regarding convertible bonds are true except

Accepted Answer

A) if the market price of common stock increases substantially, bondholders with convertible bonds benefit. 
B) convertible bonds can be converted into common stock at the option of the issuing company. 
C) bondholders with convertible bonds receive interest on the bonds until conversion. 
D) convertible bonds sell at a higher price and pay a lower rate of interest than those without the conversion option. 
A) if the market price of common stock increases substantially, bondholders with convertible bonds benefit. 
B) convertible bonds can be converted into common stock at the option of the issuing company. 
C) bondholders with convertible bonds receive interest on the bonds until conversion. 
D) convertible bonds sell at a higher price and pay a lower rate of interest than those without the conversion option.

Question 5

The times interest earned is computed by dividing

Accepted Answer

A) net income by interest expense. 
B) income before income taxes by interest expense. 
C) income before interest expense by interest expense. 
D) income before interest expense and income taxes by interest expense. 
A) net income by interest expense. 
B) income before income taxes by interest expense. 
C) income before interest expense by interest expense. 
D) income before interest expense and income taxes by interest expense.

Question 6

Sales taxes collected by a retailer from a customer are expenses

Accepted Answer

A) of the retailer. 
B) of the customers. 
C) of the government. 
D) that are not recognized by the retailer until they are submitted to the government. 
A) of the retailer. 
B) of the customers. 
C) of the government. 
D) that are not recognized by the retailer until they are submitted to the government.

Question 7

The carrying value of a bond is equal to the market price on the date of sale.

Accepted Answer

A) True 
 B)False

Question 8

Sales taxes collected by a retailer are recorded by

Accepted Answer

A) crediting Sales Tax Revenue. 
B) debiting Sales Tax Expense. 
C) crediting Sales Taxes Payable. 
D) debiting Sales Taxes Payable. 
A) crediting Sales Tax Revenue. 
B) debiting Sales Tax Expense. 
C) crediting Sales Taxes Payable. 
D) debiting Sales Taxes Payable.

Question 9

West County Bank agrees to lend Drake Builders Company $400,000 on January 1. Drake Builders Company signs a $400,000, 6%, 6-month note. The entry made by Drake Builders Company on January 1 to record the proceeds and issuance of the note is

Accepted Answer

The answer of West County Bank agrees to lend Drake...

Question 10

All of the following are true regarding financial statement analysis ratios associated with liabilities except

Accepted Answer

A) a high times interest earned ratio indicates that a company is more likely to meet interest payments as scheduled. 
B) high liquidity ratios mean that lines of credit should be high to compensate. 
C) if a company's current ratio is lower than the industry average, then it may lack liquidity. 
D) unrecorded obligations causing sizeable differences between liquidity and solvency ratios can be ignored. 
A) a high times interest earned ratio indicates that a company is more likely to meet interest payments as scheduled. 
B) high liquidity ratios mean that lines of credit should be high to compensate. 
C) if a company's current ratio is lower than the industry average, then it may lack liquidity. 
D) unrecorded obligations causing sizeable differences between liquidity and solvency ratios can be ignored.

Question 11

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount

Accepted Answer

A) less than face value. 
B) equal to face value. 
C) greater than face value. 
D) that cannot be determined. 
A) less than face value. 
B) equal to face value. 
C) greater than face value. 
D) that cannot be determined.

Question 12

The interest charged on a $350,000 note payable, at the rate of 6%, for a year would be

Accepted Answer

A) $21,000. 
B) $10,500. 
C) $5,250. 
D) $1,750. 
A) $21,000. 
B) $10,500. 
C) $5,250. 
D) $1,750.

Question 13

If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date.

Accepted Answer

A) True 
 B)False

Question 14

Wolford Company borrowed $2,000,000 from U.S. Bank on January 1, 2016 in order to expand its mining capabilities. The five-year note required annual payments of $520,872 and carried an annual interest rate of 9.5%. What is the balance in the notes payable account at December 31, 2017 after the annual payment?

Accepted Answer

A) $2,000,000 
B) $1,306,824 
C) $1,669,128 
D) $1,620,000 
A) $2,000,000 
B) $1,306,824 
C) $1,669,128 
D) $1,620,000

Question 15

The following totals for the month of April were taken from the payroll records of Metz Company. $$\begin{array} { l r } 
\text { Salaries } & \$ 90,000 \
\text { FlCA taxes withheld } & 6,885 \
\text { Income taxes withheld } & 19,800 \
\text { Medical insurance deductions } & 3,600 \
\text { Federal unemployment taxes } & 720 \
\text { State unemployment taxes } & 4,500
\end{array}$$ The entry to record the payment of net payroll would include a

Accepted Answer

A) debit to Salaries and Wages Payable for $54,495. 
B) debit to Salaries and Wages Payable for $59,715. 
C) debit to Salaries and Wages Payable for $55,215. 
D) credit to Cash for $55,215. 
A) debit to Salaries and Wages Payable for $54,495. 
B) debit to Salaries and Wages Payable for $59,715. 
C) debit to Salaries and Wages Payable for $55,215. 
D) credit to Cash for $55,215.

Question 16

Liquidity ratios measure a company's

Accepted Answer

A) operating cycle. 
B) revenue-producing ability. 
C) short-term debt paying ability. 
D) long-range solvency. 
A) operating cycle. 
B) revenue-producing ability. 
C) short-term debt paying ability. 
D) long-range solvency.

Question 17

West County Bank agrees to lend Drake Builders Company $400,000 on January 1. Drake Builders Company signs a $400,000, 6%, 6-month note. What is the adjusting entry required if Drake Builders Company prepares financial statements on March 30?

Accepted Answer

The answer of West County Bank agrees to lend Drake...

Question 18

A $800,000 bond was retired at 98 when the carrying value of the bond was $824,000. The entry to record the retirement would include a

Accepted Answer

A) gain on bond redemption of $24,000. 
B) loss on bond redemption of $24,000. 
C) loss on bond redemption of $40,000. 
D) gain on bond redemption of $40,000. 
A) gain on bond redemption of $24,000. 
B) loss on bond redemption of $24,000. 
C) loss on bond redemption of $40,000. 
D) gain on bond redemption of $40,000.

Question 19

Liabilities are classified as current or long-term based on their

Accepted Answer

A) description. 
B) payment terms. 
C) due date. 
D) amount. 
A) description. 
B) payment terms. 
C) due date. 
D) amount.

Question 20

Ervay Company has $3,500,000 of bonds outstanding. The unamortized premium is $50,400. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?

Accepted Answer

A) $15,400 gain 
B) $15,400 loss 
C) $35,000 gain 
D) $35,000 loss 
A) $15,400 gain 
B) $15,400 loss 
C) $35,000 gain 
D) $35,000 loss

The carrying value of bonds will equal the market price

Madson Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 90,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

All of the following statements regarding convertible bonds are true except

The times interest earned is computed by dividing

Sales taxes collected by a retailer from a customer are expenses

The carrying value of a bond is equal to the market price on the date of sale.

Sales taxes collected by a retailer are recorded by

West County Bank agrees to lend Drake Builders Company $400,000 on January 1. Drake Builders Company signs a $400,000, 6%, 6-month note. The entry made by Drake Builders Company on January 1 to record the proceeds and issuance of the note is

All of the following are true regarding financial statement analysis ratios associated with liabilities except

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount

The interest charged on a $350,000 note payable, at the rate of 6%, for a year would be

If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date.

Liquidity ratios measure a company's

West County Bank agrees to lend Drake Builders Company $400,000 on January 1. Drake Builders Company signs a $400,000, 6%, 6-month note. What is the adjusting entry required if Drake Builders Company prepares financial statements on March 30?

A $800,000 bond was retired at 98 when the carrying value of the bond was $824,000. The entry to record the retirement would include a

Liabilities are classified as current or long-term based on their

Ervay Company has $3,500,000 of bonds outstanding. The unamortized premium is $50,400. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 9: Reporting and Analyzing Liabilities

The carrying value of bonds will equal the market price

Madson Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 90,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

All of the following statements regarding convertible bonds are true except

The times interest earned is computed by dividing

Sales taxes collected by a retailer from a customer are expenses

The carrying value of a bond is equal to the market price on the date of sale.

Sales taxes collected by a retailer are recorded by

West County Bank agrees to lend Drake Builders Company $400,000 on January 1. Drake Builders Company signs a $400,000, 6%, 6-month note. The entry made by Drake Builders Company on January 1 to record the proceeds and issuance of the note is

All of the following are true regarding financial statement analysis ratios associated with liabilities except

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount

The interest charged on a $350,000 note payable, at the rate of 6%, for a year would be

If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date.

Liquidity ratios measure a company's

West County Bank agrees to lend Drake Builders Company $400,000 on January 1. Drake Builders Company signs a $400,000, 6%, 6-month note. What is the adjusting entry required if Drake Builders Company prepares financial statements on March 30?

A $800,000 bond was retired at 98 when the carrying value of the bond was $824,000. The entry to record the retirement would include a

Liabilities are classified as current or long-term based on their

Ervay Company has $3,500,000 of bonds outstanding. The unamortized premium is $50,400. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters