Question 1

201. The present value of a bond is also known as its

Accepted Answer

A) face value. 
B) market price. 
C) future value. 
D) deferred value. 
A) face value. 
B) market price. 
C) future value. 
D) deferred value.

Question 2

On January 1, 2015, Howard Company, a calendar-year company, issued $900,000 of notes payable, of which $225,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2015, is

Accepted Answer

A) Current Liabilities, $900,000. 
B) Long-term Debt, $900,000. 
C) Current Liabilities, $450,000; Long-term Debt, $450,000. 
D) Current Liabilities, $225,000; Long-term Debt, $675,000. 
A) Current Liabilities, $900,000. 
B) Long-term Debt, $900,000. 
C) Current Liabilities, $450,000; Long-term Debt, $450,000. 
D) Current Liabilities, $225,000; Long-term Debt, $675,000.

Question 3

Each payment on a mortgage note payable consists of interest on the original balance of the loan and a reduction of the loan principal.

Accepted Answer

A) True 
 B)False

Question 4

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 5

48. The present value of a bond is a function of two variables: (1) the payment amounts and (2) the interest (discount) rate.

Accepted Answer

A) True 
 B)False

Question 6

Under IFRS, companies do not use a

Accepted Answer

A) discount account but do use a premium account. 
B) premium account but do use a discount account. 
C) bonds payable account. 
D) discount or premium account. 
A) discount account but do use a premium account. 
B) premium account but do use a discount account. 
C) bonds payable account. 
D) discount or premium account.

Question 7

Oakley Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $42,800. If the sales tax rate is 7%, what amount must be remitted to the state for February's sales taxes?

Accepted Answer

A) $2,996 
B) $2,800 
C) $4,280 
D) It cannot be determined. 
A) $2,996 
B) $2,800 
C) $4,280 
D) It cannot be determined.

Question 8

A current liability is a debt that can reasonably be expected to be paid

Accepted Answer

A) within one year or the operating cycle, whichever is longer. 
B) between 6 months and 18 months. 
C) out of currently recognized revenues. 
D) out of cash currently on hand. 
A) within one year or the operating cycle, whichever is longer. 
B) between 6 months and 18 months. 
C) out of currently recognized revenues. 
D) out of cash currently on hand.

Question 9

Bonds are a form of interest-bearing notes payable.

Accepted Answer

A) True 
 B)False

Question 10

Farris Company borrowed $800,000 from BankTwo on January 1, 2014 in order to expand its mining capabilities. The five-year note required annual payments of $208,349 and carried an annual interest rate of 8.5%. What is the balance in the notes payable account at January 1, 2016?

Accepted Answer

A) $800,000 
B) $507,372 
C) $659,651 
D) $664,000 
A) $800,000 
B) $507,372 
C) $659,651 
D) $664,000

Question 11

214. On January 1, Runner Corporation issued $2,000,000, 13%, 5-year bonds with interest payable on July 1 and January 1. The bonds sold for $2,197,080. The market rate of interest for these bonds was 11%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for:

Accepted Answer

A) $130,000. 
B) $142,810. 
C) $120,839. 
D) $241,679. 
A) $130,000. 
B) $142,810. 
C) $120,839. 
D) $241,679.

Question 12

232. Over the term of the bonds, the balance in the Discount on Bonds Payable account will

Accepted Answer

A) fluctuate up and down if the market is volatile. 
B) decrease. 
C) increase. 
D) be unaffected until the bonds mature. 
A) fluctuate up and down if the market is volatile. 
B) decrease. 
C) increase. 
D) be unaffected until the bonds mature.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

A note payable is in the form of

Accepted Answer

A) a contingency that is reasonably likely to occur. 
B) a written promissory note. 
C) an oral agreement. 
D) a standing agreement. 
A) a contingency that is reasonably likely to occur. 
B) a written promissory note. 
C) an oral agreement. 
D) a standing agreement.

Question 15

Kelly Rice has a large consulting practice. New clients are required to pay one-half of the consulting fees up front. The balance is paid at the conclusion of the consultation. How does Rice account for the cash received at the end of the engagement?

Accepted Answer

A) Cash Unearned Service Revenue 
B) Cash Service Revenue 
C) Prepaid Service Fees Service Revenue 
D) No entry is required when the engagement is concluded. 
A) Cash Unearned Service Revenue 
B) Cash Service Revenue 
C) Prepaid Service Fees Service Revenue 
D) No entry is required when the engagement is concluded.

Question 16

Interest expense is reported under Other Expenses and Losses in the income statement.

Accepted Answer

A) True 
 B)False

Question 17

Under IFRS, the proceeds from the issuance of convertible debt are reported as

Accepted Answer

A) debt only. 
B) equity only. 
C) debt or equity depending on the circumstances. 
D) both debt and equity. 
A) debt only. 
B) equity only. 
C) debt or equity depending on the circumstances. 
D) both debt and equity.

Question 18

The adjusted trial balance for Lamar Corp. at the end of the current year, 2015, contained the following accounts.   The total long-term liabilities reported on the balance sheet are

Accepted Answer

A) $1,945,000. 
B) $1,935,000. 
C) $2,095,000. 
D) $2,085,000. 
A) $1,945,000. 
B) $1,935,000. 
C) $2,095,000. 
D) $2,085,000.

Question 19

Bonds that have specific assets of the issuer pledged as collateral are

Accepted Answer

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

Question 20

Farris Company borrowed $800,000 from BankTwo on January 1, 2014 in order to expand its mining capabilities. The five-year note required annual payments of $208,349 and carried an annual interest rate of 8.5%. What is the amount of expense Farris must recognize on its 2015 income statement?

Accepted Answer

A) $68,000. 
B) $56,070. 
C) $43,127. 
D) $50,290. 
A) $68,000. 
B) $56,070. 
C) $43,127. 
D) $50,290.

201. The present value of a bond is also known as its

On January 1, 2015, Howard Company, a calendar-year company, issued $900,000 of notes payable, of which $225,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2015, is

Each payment on a mortgage note payable consists of interest on the original balance of the loan and a reduction of the loan principal.

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

48. The present value of a bond is a function of two variables: (1) the payment amounts and (2) the interest (discount) rate.

Under IFRS, companies do not use a

Oakley Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $42,800. If the sales tax rate is 7%, what amount must be remitted to the state for February's sales taxes?

A current liability is a debt that can reasonably be expected to be paid

Bonds are a form of interest-bearing notes payable.

Farris Company borrowed $800,000 from BankTwo on January 1, 2014 in order to expand its mining capabilities. The five-year note required annual payments of $208,349 and carried an annual interest rate of 8.5%. What is the balance in the notes payable account at January 1, 2016?

232. Over the term of the bonds, the balance in the Discount on Bonds Payable account will

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

A note payable is in the form of

Kelly Rice has a large consulting practice. New clients are required to pay one-half of the consulting fees up front. The balance is paid at the conclusion of the consultation. How does Rice account for the cash received at the end of the engagement?

Interest expense is reported under Other Expenses and Losses in the income statement.

Under IFRS, the proceeds from the issuance of convertible debt are reported as

The adjusted trial balance for Lamar Corp. at the end of the current year, 2015, contained the following accounts. The total long-term liabilities reported on the balance sheet are

Bonds that have specific assets of the issuer pledged as collateral are

Farris Company borrowed $800,000 from BankTwo on January 1, 2014 in order to expand its mining capabilities. The five-year note required annual payments of $208,349 and carried an annual interest rate of 8.5%. What is the amount of expense Farris must recognize on its 2015 income statement?

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, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

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Exam 10: Liabilities

201. The present value of a bond is also known as its

On January 1, 2015, Howard Company, a calendar-year company, issued $900,000 of notes payable, of which $225,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2015, is

Each payment on a mortgage note payable consists of interest on the original balance of the loan and a reduction of the loan principal.

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

48. The present value of a bond is a function of two variables: (1) the payment amounts and (2) the interest (discount) rate.

Under IFRS, companies do not use a

Oakley Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $42,800. If the sales tax rate is 7%, what amount must be remitted to the state for February's sales taxes?

A current liability is a debt that can reasonably be expected to be paid

Bonds are a form of interest-bearing notes payable.

Farris Company borrowed $800,000 from BankTwo on January 1, 2014 in order to expand its mining capabilities. The five-year note required annual payments of $208,349 and carried an annual interest rate of 8.5%. What is the balance in the notes payable account at January 1, 2016?

232. Over the term of the bonds, the balance in the Discount on Bonds Payable account will

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

A note payable is in the form of

Kelly Rice has a large consulting practice. New clients are required to pay one-half of the consulting fees up front. The balance is paid at the conclusion of the consultation. How does Rice account for the cash received at the end of the engagement?

Interest expense is reported under Other Expenses and Losses in the income statement.

Under IFRS, the proceeds from the issuance of convertible debt are reported as

The adjusted trial balance for Lamar Corp. at the end of the current year, 2015, contained the following accounts. The total long-term liabilities reported on the balance sheet are

Bonds that have specific assets of the issuer pledged as collateral are

Farris Company borrowed $800,000 from BankTwo on January 1, 2014 in order to expand its mining capabilities. The five-year note required annual payments of $208,349 and carried an annual interest rate of 8.5%. What is the amount of expense Farris must recognize on its 2015 income statement?

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, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters