Question 1

Bonds issued giving the holder the option of exchanging the bonds for capital stock of the corporation are called

Accepted Answer

A)  term bonds. 
B)  convertible bonds. 
C)  capital stock bonds. 
D)  callable bonds. 
A)  term bonds. 
B)  convertible bonds. 
C)  capital stock bonds. 
D)  callable bonds. B

Question 2

Match the terms with the definitions.
-The accumulation and investment of money over a period of years to provide the amount needed for the redemption of bonds.

Accepted Answer

A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds 
A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds D

Question 3

Bonds issued with a provision that they may be called for redemption before the date of maturity are called convertible bonds.

Accepted Answer

A) True 
 B)False  False

Question 4

Convertible bonds give the issuing corporation the option of calling for redemption at a stated price before maturity date.

Accepted Answer

A) True 
 B)False

Question 5

A ten-year bond issue of $400,000, interest rate of 9% paid semiannually, is sold for $440,000 when the market rate is 8%. The bonds were not sold between interest dates and the straight-line amortization method is used. The bond interest expense for the first interest payment would be

Accepted Answer

A)  $2,000. 
B)  $16,000. 
C)  $18,000. 
D)  $32,000. 
A)  $2,000. 
B)  $16,000. 
C)  $18,000. 
D)  $32,000.

Question 6

Gain on Redemption is reported as a component of other income on the corporation's income statement.

Accepted Answer

A) True 
 B)False

Question 7

If the interest rate on bonds is higher than the current market rate, they will sell at

Accepted Answer

A)  a discount. 
B)  a premium. 
C)  face value. 
D)  maturity value. 
A)  a discount. 
B)  a premium. 
C)  face value. 
D)  maturity value.

Question 8

The bonds payable account would be classified as a(n)

Accepted Answer

A)  current liability. 
B)  adjunct-liability. 
C)  contra-liability. 
D)  long-term liability. 
A)  current liability. 
B)  adjunct-liability. 
C)  contra-liability. 
D)  long-term liability.

Question 9

If bonds were being issued with a stated rate of 8% and the market rate is 9%, the bonds would most likely sell at which of the following?

Accepted Answer

A)  108 
B)  100 
C)  95 
D)  80 
A)  108 
B)  100 
C)  95 
D)  80

Question 10

Bonds issued in a series so that a specified amount of the bond matures each year are called

Accepted Answer

A)  term bonds. 
B)  serial bonds. 
C)  convertible bonds. 
D)  callable bonds. 
A)  term bonds. 
B)  serial bonds. 
C)  convertible bonds. 
D)  callable bonds.

Question 11

A discount amortization effects a gradual reduction of the bonds payable account to zero over time.

Accepted Answer

A) True 
 B)False

Question 12

Convertible bonds are

Accepted Answer

A)  bonds that all have the same maturity date. 
B)  bonds issued in a series so that a specified amount of the bonds matures each year. 
C)  bonds that give the issuing corporation the option of calling the bonds for redemption before the maturity date. 
D)  bonds that give the holder the option of exchanging the bonds for capital stock of the corporation. 
A)  bonds that all have the same maturity date. 
B)  bonds issued in a series so that a specified amount of the bonds matures each year. 
C)  bonds that give the issuing corporation the option of calling the bonds for redemption before the maturity date. 
D)  bonds that give the holder the option of exchanging the bonds for capital stock of the corporation.

Question 13

Bonds issued with a provision that they may be called for redemption before the date of maturity are known as

Accepted Answer

A)  convertible bonds. 
B)  term bonds. 
C)  debenture bonds. 
D)  callable bonds. 
A)  convertible bonds. 
B)  term bonds. 
C)  debenture bonds. 
D)  callable bonds.

Question 14

Usually, there is either a gain or a loss involved in the redemption of bonds before their maturity date.

Accepted Answer

A) True 
 B)False

Question 15

The straight-line method of amortizing a bond premium or discount provides for amortizing an equal amount each time period.

Accepted Answer

A) True 
 B)False

Question 16

Match the terms with the definitions.
-A written promise to pay a specific sum of money at a specific future date.

Accepted Answer

A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds 
A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds

Question 17

Bonds secured by a mortgage on corporate property are called guaranteed bonds.

Accepted Answer

A) True 
 B)False

Question 18

Match the terms with the definitions.
-The amount written on the face of the bond certificate.

Accepted Answer

A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds 
A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds

Question 19

Match the terms with the definitions.
-Bonds payable plus the premium or less the discount on bonds payable.

Accepted Answer

A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds 
A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds

Question 20

Bonds Sinking Fund is reported as a liability on the corporation's balance sheet.

Accepted Answer

A) True 
 B)False

Exam 22: Corporations: Bonds

Bonds issued giving the holder the option of exchanging the bonds for capital stock of the corporation are called

Match the terms with the definitions. -The accumulation and investment of money over a period of years to provide the amount needed for the redemption of bonds.

Bonds issued with a provision that they may be called for redemption before the date of maturity are called convertible bonds.

Convertible bonds give the issuing corporation the option of calling for redemption at a stated price before maturity date.

A ten-year bond issue of $400,000, interest rate of 9% paid semiannually, is sold for $440,000 when the market rate is 8%. The bonds were not sold between interest dates and the straight-line amortization method is used. The bond interest expense for the first interest payment would be

Gain on Redemption is reported as a component of other income on the corporation's income statement.

If the interest rate on bonds is higher than the current market rate, they will sell at

The bonds payable account would be classified as a(n)

If bonds were being issued with a stated rate of 8% and the market rate is 9%, the bonds would most likely sell at which of the following?

Bonds issued in a series so that a specified amount of the bond matures each year are called

A discount amortization effects a gradual reduction of the bonds payable account to zero over time.

Convertible bonds are

Bonds issued with a provision that they may be called for redemption before the date of maturity are known as

Usually, there is either a gain or a loss involved in the redemption of bonds before their maturity date.

The straight-line method of amortizing a bond premium or discount provides for amortizing an equal amount each time period.

Match the terms with the definitions. -A written promise to pay a specific sum of money at a specific future date.

Bonds secured by a mortgage on corporate property are called guaranteed bonds.

Match the terms with the definitions. -The amount written on the face of the bond certificate.

Match the terms with the definitions. -Bonds payable plus the premium or less the discount on bonds payable.

Bonds Sinking Fund is reported as a liability on the corporation's balance sheet.

Introduction to Accounting

Analyzing Transactions: the Accounting Equation

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Accounting for Purchases and Cash Payments

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Accounts Receivable

Accounting for Notes and Interest

Accounting for Long-Term Assets

Accounting for Partnerships

Corporations: Organization and Capital Stocks

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Statement of Cash Flows

Analysis of Financial Statements

Departmental Accounting

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

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