Question 1

The effective interest method amortizes premium or discount in a manner that produces an) rate of interest from period to period.

Accepted Answer

The answer of The effective interest method amortizes premium or...

Question 2

If bonds are issued at 101.25, this means that

Accepted Answer

A) a $1,000 bond sold for $101.25. 
B) the bonds sold at a discount. 
C) a $1,000 bond sold for $1,012.50. 
D) the bond rate of interest is 10.13% of the market rate of interest. 
A) a $1,000 bond sold for $101.25. 
B) the bonds sold at a discount. 
C) a $1,000 bond sold for $1,012.50. 
D) the bond rate of interest is 10.13% of the market rate of interest.

Question 3

When a bond is issued at a discount, the interest expense each year is less than the cash payment for interest.

Accepted Answer

A) True 
 B)False

Question 4

Endeavor Company issued 20-year bonds with a coupon rate of 6% when the market rate of interest was 9%.This means that the bonds were issued

Accepted Answer

A) at a premium. 
B) at a discount. 
C) at the face value. 
D) with an additional 3 years of interest. 
A) at a premium. 
B) at a discount. 
C) at the face value. 
D) with an additional 3 years of interest.

Question 5

On January 2, 2015, Wynn Corporation sold $750,000 of bonds for $745,000.The bonds will mature in 10 years and pay interest annually on December 31.Wynn properly recorded the payment of interest and amortization of the discount using the effective interest method.Which of the following statements is true about the carrying value of the bonds and/or the unamortized discount at the end of 2015?

Accepted Answer

A) The carrying value will be less than $745,000. 
B) The carrying value will be $745,000. 
C) The carrying value will be greater than $745,000. 
D) The unamortized premium will be less than $5,000. 
A) The carrying value will be less than $745,000. 
B) The carrying value will be $745,000. 
C) The carrying value will be greater than $745,000. 
D) The unamortized premium will be less than $5,000.

Question 6

Review the consolidated balance sheets of Backkus Metal Company.
REQUIRED:
Which one of the liabilities shown in the balance sheets is used in the calculation of the debt-to-equity ratio?
If we can assume that the stockholders' equity total remained relatively constant for the two years, how would the ratio change increase/decrease) from 2014 to 2015? What would this say about the company's financial position?

Accepted Answer

@#IMG-DLM& If it is assumed that stockho

Question 7

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

Accepted Answer

A) an asset. 
B) an expense. 
C) a long-term liability. 
D) a contra long-term liability. 
A) an asset. 
B) an expense. 
C) a long-term liability. 
D) a contra long-term liability.

Question 8

Review the consolidated balance sheets of Backkus Metal Company.
REQUIRED:
1) What are the total long-term liabilities for the two years presented?
2) What is the percent increase/decrease of long-term liabilities from 2014 to 2015? Which liability appears to have caused the greatest change?

Accepted Answer

1) 2015 - $8,023 in millions)
$2,651 Lon

Question 9

The result of using the effective interest method of amortization of discount on bonds is that the

Accepted Answer

A) interest expense for each amortization period is constant. 
B) effective interest rate for each amortization period is constant. 
C) amount of interest expense decreases each period. 
D) cash interest payment is greater than the interest expense. 
A) interest expense for each amortization period is constant. 
B) effective interest rate for each amortization period is constant. 
C) amount of interest expense decreases each period. 
D) cash interest payment is greater than the interest expense.

Question 10

Convertible bonds normally sell at a higher price than non-convertible bonds.

Accepted Answer

A) True 
 B)False

Question 11

An investor views a high debt­to­equity ratio and a low times interest earned as a favorable sign of a company's abilities to meet its long-term obligations.

Accepted Answer

A) True 
 B)False

Question 12

On January 1, 2015, Corner Store, Inc.issued $400,000, 10-year, 10% bonds for $354,200.The bonds pay interest on June 30 and December 31.The market rate is 12%.The cash payment on June 30, 2015 is

Accepted Answer

A) $20,000. 
B) $21,200. 
C) $24,000. 
D) $17,710. 
A) $20,000. 
B) $21,200. 
C) $24,000. 
D) $17,710.

Question 13

The amortization of bond discount increases the effective interest expense incurred each period for the issuer while amortization of bond premium decreases it.

Accepted Answer

A) True 
 B)False

Question 14

The asset leased under an operating lease requires the lessee to record depreciation expense.

Accepted Answer

A) True 
 B)False

Question 15

Bonds are typically issued in denominations of $10,000.

Accepted Answer

A) True 
 B)False

Question 16

Most investors would prefer to see equity rather than debt on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 17

The issue price of a bond is always present valued using the market rate of interest.

Accepted Answer

A) True 
 B)False

Question 18

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-operating and capital leases. 
C) If a lessor classifies a lease as a capital lease, then the lessee records a lease liability on its balance sheet. 
D) If a lease is classified as an operating lease, the lessee records a lease liability 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-operating and capital leases. 
C) If a lessor classifies a lease as a capital lease, then the lessee records a lease liability on its balance sheet. 
D) If a lease is classified as an operating lease, the lessee records a lease liability on its balance sheet.

Question 19

In calculating deferred income taxes, occur when an item is included in the tax calculation and is never included for financial accounting purposes, or vice versa.

Accepted Answer

permanent

Question 20

Which of the following accounts would not appear on the balance sheet of a lessee company recording a capital lease?

Accepted Answer

A) Accumulated depreciation on the leased asset 
B) Lease obligation in the current liability section 
C) Lease obligation in the long-term liability section 
D) Rent expense on the income statement 
A) Accumulated depreciation on the leased asset 
B) Lease obligation in the current liability section 
C) Lease obligation in the long-term liability section 
D) Rent expense on the income statement

The effective interest method amortizes premium or discount in a manner that produces an) rate of interest from period to period.

If bonds are issued at 101.25, this means that

When a bond is issued at a discount, the interest expense each year is less than the cash payment for interest.

Endeavor Company issued 20-year bonds with a coupon rate of 6% when the market rate of interest was 9%.This means that the bonds were issued

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

Review the consolidated balance sheets of Backkus Metal Company. REQUIRED: 1) What are the total long-term liabilities for the two years presented? 2) What is the percent increase/decrease of long-term liabilities from 2014 to 2015? Which liability appears to have caused the greatest change?

The result of using the effective interest method of amortization of discount on bonds is that the

Convertible bonds normally sell at a higher price than non-convertible bonds.

An investor views a high debttoequity ratio and a low times interest earned as a favorable sign of a company's abilities to meet its long-term obligations.

On January 1, 2015, Corner Store, Inc.issued $400,000, 10-year, 10% bonds for $354,200.The bonds pay interest on June 30 and December 31.The market rate is 12%.The cash payment on June 30, 2015 is

The amortization of bond discount increases the effective interest expense incurred each period for the issuer while amortization of bond premium decreases it.

The asset leased under an operating lease requires the lessee to record depreciation expense.

Bonds are typically issued in denominations of $10,000.

Most investors would prefer to see equity rather than debt on the balance sheet.

The issue price of a bond is always present valued using the market rate of interest.

Which of the following statements regarding leases is false?

In calculating deferred income taxes, occur when an item is included in the tax calculation and is never included for financial accounting purposes, or vice versa.

Which of the following accounts would not appear on the balance sheet of a lessee company recording a capital lease?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 10: Long-Term Liabilities

The effective interest method amortizes premium or discount in a manner that produces an) rate of interest from period to period.

If bonds are issued at 101.25, this means that

When a bond is issued at a discount, the interest expense each year is less than the cash payment for interest.

Endeavor Company issued 20-year bonds with a coupon rate of 6% when the market rate of interest was 9%.This means that the bonds were issued

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

Review the consolidated balance sheets of Backkus Metal Company. REQUIRED: 1) What are the total long-term liabilities for the two years presented? 2) What is the percent increase/decrease of long-term liabilities from 2014 to 2015? Which liability appears to have caused the greatest change?

The result of using the effective interest method of amortization of discount on bonds is that the

Convertible bonds normally sell at a higher price than non-convertible bonds.

An investor views a high debt­to­equity ratio and a low times interest earned as a favorable sign of a company's abilities to meet its long-term obligations.

On January 1, 2015, Corner Store, Inc.issued $400,000, 10-year, 10% bonds for $354,200.The bonds pay interest on June 30 and December 31.The market rate is 12%.The cash payment on June 30, 2015 is

The amortization of bond discount increases the effective interest expense incurred each period for the issuer while amortization of bond premium decreases it.

The asset leased under an operating lease requires the lessee to record depreciation expense.

Bonds are typically issued in denominations of $10,000.

Most investors would prefer to see equity rather than debt on the balance sheet.

The issue price of a bond is always present valued using the market rate of interest.

Which of the following statements regarding leases is false?

In calculating deferred income taxes, occur when an item is included in the tax calculation and is never included for financial accounting purposes, or vice versa.

Which of the following accounts would not appear on the balance sheet of a lessee company recording a capital lease?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

An investor views a high debttoequity ratio and a low times interest earned as a favorable sign of a company's abilities to meet its long-term obligations.