Question 1

Match these terms with their definitions.
-The legal owner of a leased asset.

Accepted Answer

A) Bond 
B) Contract, coupon, stated rate 
C) Discount 
D) Effective interest rate method 
E) Face value, par value, principal
F)Interest amortization
G)Lease
H)Lessee
I)Lessor
J)Leverage
K)Long-term debt
L)Market rate, yield
M)Maturity
N)Premium
O)Straight-line method 
A) Bond 
B) Contract, coupon, stated rate 
C) Discount 
D) Effective interest rate method 
E) Face value, par value, principal
F)Interest amortization
G)Lease
H)Lessee
I)Lessor
J)Leverage
K)Long-term debt
L)Market rate, yield
M)Maturity
N)Premium
O)Straight-line method

Question 2

Refer to Korn Business Solutions. Write the journal entries that would be used to record each type of lease described in the previous question.

Accepted Answer

Sure, here are the journal entries for e

Question 3

On January 2, 2019, Kangaroo Convenience Stores issued 10-year, $5,000,000, zero-coupon bonds at 75. What is the amount of interest expense recorded in 2019 using the straight line amortization method?
a.$5,000,000
b.$3,750,000
c.$1,250,000
d.$125,000

Accepted Answer

To determine the amount of interest expe

Question 4

Match these terms with their definitions.
-Debt that does not have collateral and is thus unsecured.

Accepted Answer

A) Callable bonds 
B) Long-term lease 
C) Convertible bonds 
D) Debenture bonds 
E) Junk bonds
F)Mortgage bonds
G)Notes payable
H)Short-term lease
I)Secured bonds 
A) Callable bonds 
B) Long-term lease 
C) Convertible bonds 
D) Debenture bonds 
E) Junk bonds
F)Mortgage bonds
G)Notes payable
H)Short-term lease
I)Secured bonds

Question 5

When a bond is issued at a discount, the amortization of the bond interest increases each year using the straight line method.

Accepted Answer

When a bond is issued at a discount, it

Question 6

When the yield rate of interest is greater than the stated rate, then the bond will be issued at a discount.

Accepted Answer

When the yield rate of interest, also kn

Question 7

A Discount on Bonds Payable account would appear on the balance sheet as

Accepted Answer

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

Question 8

Convertible bonds are attractive to bondholders because

Accepted Answer

A) they usually carry a higher rate of interest than non-convertible bonds. 
B) they carry a convertible interest rate that can be increased when the market rate of interest increases. 
C) they can be converted into stock at the bondholder's option. 
D) the issuing company cannot retire the bonds before maturity. 
A) they usually carry a higher rate of interest than non-convertible bonds. 
B) they carry a convertible interest rate that can be increased when the market rate of interest increases. 
C) they can be converted into stock at the bondholder's option. 
D) the issuing company cannot retire the bonds before maturity.

Question 9

Bonds are a popular source of financing because

Accepted Answer

A) the relative cost of issuing debt is often lower than the cost of issuing equity. 
B) financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issues of stock. 
C) a company having cash flow problems can postpone payment of interest to bondholders. 
D) the bondholders can always convert their bonds into stock if they choose. 
A) the relative cost of issuing debt is often lower than the cost of issuing equity. 
B) financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issues of stock. 
C) a company having cash flow problems can postpone payment of interest to bondholders. 
D) the bondholders can always convert their bonds into stock if they choose.

Question 10

The Premium on Bonds Payable account is shown on the balance sheet as

Accepted Answer

A) a contra asset. 
B) a reduction of an expense. 
C) a separate valuation account that increases the bond liability to market value at the issue date 
D) a subtraction from a long-term liability. 
A) a contra asset. 
B) a reduction of an expense. 
C) a separate valuation account that increases the bond liability to market value at the issue date 
D) a subtraction from a long-term liability.

Question 11

Which of the following statements regarding leases is false?

Accepted Answer

A) Lease agreements are a popular form of financing the purchase of assets because leases do not require a large initial outlay of cash. 
B) Accounting recognizes two types of leases--short- and long-term leases. 
C) If a lessor classifies a lease as a long-term lease, then the lessor records a lease liability on its balance sheet. 
D) If a lease is classified as a short-term lease, the lessee records an asset on its balance sheet. 
A) Lease agreements are a popular form of financing the purchase of assets because leases do not require a large initial outlay of cash. 
B) Accounting recognizes two types of leases--short- and long-term leases. 
C) If a lessor classifies a lease as a long-term lease, then the lessor records a lease liability on its balance sheet. 
D) If a lease is classified as a short-term lease, the lessee records an asset on its balance sheet.

Question 12

A company's balance sheet showed the following amounts for liabilities and stockholders' equity accounts: Current Liabilities, $50,000; Bonds Payable, $600,000; Long-Term Lease Obligations, $120,000; and Deferred Income Tax Liability, $20,000. Total stockholders' equity was $520,000. What is the debt-to-equity ratio?

Accepted Answer

A) 0.66 
B) 0.70 
C) 1.42 
D) 1.52 
A) 0.66 
B) 0.70 
C) 1.42 
D) 1.52

Question 13

A convertible bond is one where

Accepted Answer

A) the issuer can convert from a fixed interest rate to a floating rate. 
B) the issuer can convert the bond from long-term to short-term. 
C) the issuer can retire the bond before its specified maturity date. 
D) the bondholder can convert the bond into common stock at a future time. 
A) the issuer can convert from a fixed interest rate to a floating rate. 
B) the issuer can convert the bond from long-term to short-term. 
C) the issuer can retire the bond before its specified maturity date. 
D) the bondholder can convert the bond into common stock at a future time.

Question 14

Match these terms with their definitions.
-The rate found in the debt contract that determines the amount of the interest payment.

Accepted Answer

A) Bond 
B) Contract, coupon, stated rate 
C) Discount 
D) Effective interest rate method 
E) Face value, par value, principal
F)Interest amortization
G)Lease
H)Lessee
I)Lessor
J)Leverage
K)Long-term debt
L)Market rate, yield
M)Maturity
N)Premium
O)Straight-line method 
A) Bond 
B) Contract, coupon, stated rate 
C) Discount 
D) Effective interest rate method 
E) Face value, par value, principal
F)Interest amortization
G)Lease
H)Lessee
I)Lessor
J)Leverage
K)Long-term debt
L)Market rate, yield
M)Maturity
N)Premium
O)Straight-line method

Question 15

Refer to Korn Business Solutions. What are the two types of leases that a company can have? Describe each briefly.

Accepted Answer

The two types of leases that a company c

Question 16

Match these terms with their definitions.
-The amount that must be repaid at maturity.

Accepted Answer

A) Bond 
B) Contract, coupon, stated rate 
C) Discount 
D) Effective interest rate method 
E) Face value, par value, principal
F)Interest amortization
G)Lease
H)Lessee
I)Lessor
J)Leverage
K)Long-term debt
L)Market rate, yield
M)Maturity
N)Premium
O)Straight-line method 
A) Bond 
B) Contract, coupon, stated rate 
C) Discount 
D) Effective interest rate method 
E) Face value, par value, principal
F)Interest amortization
G)Lease
H)Lessee
I)Lessor
J)Leverage
K)Long-term debt
L)Market rate, yield
M)Maturity
N)Premium
O)Straight-line method

Question 17

Kids R Kids Company
Selected data from the comparative financial statements are provided below:
   ​
   
​
  
-Refer to King Cotton Company. Which long-term liability would also be listed in the short-term liability section? Why?

Accepted Answer

The long-term liability that would also

Question 18

Although short-term leases are not recorded on the balance sheet by the lessee, they are disclosed in the ____________________.

Accepted Answer

Although short-term leases are

Question 19

When the market rate of interest was 9%, Kennesaw Van Lines leased several transfer trucks. The annual payments are $1,000,000 and the life of the lease is 8 years. It is estimated that the useful life of the trucks is 10 years. The present value interest factors for 9% are provided below:   The company should record the acquisition of the trucks (rounded to nearest thousand) as an asset with a cost of: 
a.$422,000.
b.$502,000.
c.$5,535,000.
d.$6,418,000.

Accepted Answer

The answer of When the market rate of interest was...

Question 20

Match these terms with their definitions.
-Agreement whereby the legal owner of the asset retains substantially all of the risks and obligations of ownership

Accepted Answer

A) Callable bonds 
B) Long-term lease 
C) Convertible bonds 
D) Debenture bonds 
E) Junk bonds
F)Mortgage bonds
G)Notes payable
H)Short-term lease
I)Secured bonds 
A) Callable bonds 
B) Long-term lease 
C) Convertible bonds 
D) Debenture bonds 
E) Junk bonds
F)Mortgage bonds
G)Notes payable
H)Short-term lease
I)Secured bonds

Match these terms with their definitions. -The legal owner of a leased asset.

Refer to Korn Business Solutions. Write the journal entries that would be used to record each type of lease described in the previous question.

On January 2, 2019, Kangaroo Convenience Stores issued 10-year, $5,000,000, zero-coupon bonds at 75. What is the amount of interest expense recorded in 2019 using the straight line amortization method? a.$5,000,000 b.$3,750,000 c.$1,250,000 d.$125,000

Match these terms with their definitions. -Debt that does not have collateral and is thus unsecured.

When a bond is issued at a discount, the amortization of the bond interest increases each year using the straight line method.

When the yield rate of interest is greater than the stated rate, then the bond will be issued at a discount.

A Discount on Bonds Payable account would appear on the balance sheet as

Convertible bonds are attractive to bondholders because

Bonds are a popular source of financing because

The Premium on Bonds Payable account is shown on the balance sheet as

Which of the following statements regarding leases is false?

A convertible bond is one where

Match these terms with their definitions. -The rate found in the debt contract that determines the amount of the interest payment.

Refer to Korn Business Solutions. What are the two types of leases that a company can have? Describe each briefly.

Match these terms with their definitions. -The amount that must be repaid at maturity.

Kids R Kids Company Selected data from the comparative financial statements are provided below: -Refer to King Cotton Company. Which long-term liability would also be listed in the short-term liability section? Why?

Although short-term leases are not recorded on the balance sheet by the lessee, they are disclosed in the ____________________.

Match these terms with their definitions. -Agreement whereby the legal owner of the asset retains substantially all of the risks and obligations of ownership

Accounting and The Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control And Cash

Sales And Receivables

Cost Of Goods Sold and Inventory

Operating Assets

Current and Contingent Liabilities

Stockholders Apos Equity

The Statement Of Cash Flows

Financial Statement Analysis

Finance and Stock Market Equilibrium

Filters

Exam 9: Long Term Liabilities

Match these terms with their definitions. -The legal owner of a leased asset.

Refer to Korn Business Solutions. Write the journal entries that would be used to record each type of lease described in the previous question.

On January 2, 2019, Kangaroo Convenience Stores issued 10-year, $5,000,000, zero-coupon bonds at 75. What is the amount of interest expense recorded in 2019 using the straight line amortization method? a.$5,000,000 b.$3,750,000 c.$1,250,000 d.$125,000

Match these terms with their definitions. -Debt that does not have collateral and is thus unsecured.

When a bond is issued at a discount, the amortization of the bond interest increases each year using the straight line method.

When the yield rate of interest is greater than the stated rate, then the bond will be issued at a discount.

A Discount on Bonds Payable account would appear on the balance sheet as

Convertible bonds are attractive to bondholders because

Bonds are a popular source of financing because

The Premium on Bonds Payable account is shown on the balance sheet as

Which of the following statements regarding leases is false?

A convertible bond is one where

Match these terms with their definitions. -The rate found in the debt contract that determines the amount of the interest payment.

Refer to Korn Business Solutions. What are the two types of leases that a company can have? Describe each briefly.

Match these terms with their definitions. -The amount that must be repaid at maturity.

Kids R Kids Company Selected data from the comparative financial statements are provided below: ​ ​ -Refer to King Cotton Company. Which long-term liability would also be listed in the short-term liability section? Why?

Although short-term leases are not recorded on the balance sheet by the lessee, they are disclosed in the ____________________.

Match these terms with their definitions. -Agreement whereby the legal owner of the asset retains substantially all of the risks and obligations of ownership

Accounting and The Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control And Cash

Sales And Receivables

Cost Of Goods Sold and Inventory

Operating Assets

Current and Contingent Liabilities

Stockholders Apos Equity

The Statement Of Cash Flows

Financial Statement Analysis

Finance and Stock Market Equilibrium

Filters

Kids R Kids Company Selected data from the comparative financial statements are provided below: -Refer to King Cotton Company. Which long-term liability would also be listed in the short-term liability section? Why?