Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Frank Crawford Corporation's balance sheet showed the following amounts: Current Liabilities, $15,000; Bonds Payable, $8,000; Lease Obligations, $9,000; and Notes Payable, $5,600. Total stockholders' equity was $17,000. The debt-to-equity ratio is:

Accepted Answer

A)  0.88. 
B)  1.18. 
C)  0.71. 
D)  2.21. 
A)  0.88. 
B)  1.18. 
C)  0.71. 
D)  2.21.

Question 4

On January 1, 2015, Clarkson, 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%. What is the carrying value of the bonds after the first interest payment is made on June 30, 2015?

Accepted Answer

A)  $352,960 
B)  $354,200 
C)  $355,452 
D)  $400,000 
A)  $352,960 
B)  $354,200 
C)  $355,452 
D)  $400,000

Question 5

If bonds were initially issued at a premium, the carrying value of the bonds on the issuer's books will

Accepted Answer

A)  decrease as the bonds approach their maturity date. 
B)  increase as the bonds approach their maturity date. 
C)  remain constant throughout the bonds' life. 
D)  fluctuate throughout the bonds' life. 
A)  decrease as the bonds approach their maturity date. 
B)  increase as the bonds approach their maturity date. 
C)  remain constant throughout the bonds' life. 
D)  fluctuate throughout the bonds' life.

Question 6

When a bond issue is retired early, the amount of unamortized discount or premium is not considered in the calculation of a gain or loss.

Accepted Answer

A) True 
 B)False

Question 7

A lease is accounted for as a capital lease if the lease term is 75% or more of the property's economic life.

Accepted Answer

A) True 
 B)False

Question 8

Review the information for Grenada Corporation.
REQUIRED:
The note disclosure mentions contingent rent payments. What do you think this means with regard to Grenada Corporation?

Accepted Answer

The implication is that under certain ci

Question 9

Match the following bond and long-term liability related terms to the appropriate definition.
-An obligation that will not be satisfied within one year.

Accepted Answer

A) Long-term liability 
B) Face value 
C) Debenture bonds 
D) Serial bonds 
E) Callable bonds
F)Face rate of interest
G)Market rate of interest
H)Bond issue price
I)Premium
J)Discount
K)Effective interest method of amortization
L)Carrying value
M)Gain or loss on redemption 
A) Long-term liability 
B) Face value 
C) Debenture bonds 
D) Serial bonds 
E) Callable bonds
F)Face rate of interest
G)Market rate of interest
H)Bond issue price
I)Premium
J)Discount
K)Effective interest method of amortization
L)Carrying value
M)Gain or loss on redemption

Question 10

If bonds were initially issued at a discount, the interest expense on the bonds calculated using the effective interest method will

Accepted Answer

A)  decrease as the bonds approach their maturity date. 
B)  increase as the bonds approach their maturity date. 
C)  remain constant throughout the bonds' life. 
D)  fluctuate throughout the bonds' life. 
A)  decrease as the bonds approach their maturity date. 
B)  increase as the bonds approach their maturity date. 
C)  remain constant throughout the bonds' life. 
D)  fluctuate throughout the bonds' life.

Question 11

Neville Company issued $100,000 of 6%, 10 year bonds when the market rate of interest was 5%. The proceeds from this bond issue were $107,732. Using the effective interest method of amortization, which of the following statements is true? Assume interest is paid annually.

Accepted Answer

A)  Interest payments to bondholders each period will be $6,464. 
B)  Interest payments to bondholders each period will be $5,000. 
C)  Amortization of the premium for the first interest period will be $1,226. 
D)  Amortization of the premium for the first interest period will be $613. 
A)  Interest payments to bondholders each period will be $6,464. 
B)  Interest payments to bondholders each period will be $5,000. 
C)  Amortization of the premium for the first interest period will be $1,226. 
D)  Amortization of the premium for the first interest period will be $613.

Question 12

An lease is recorded on the lessee's balance sheet as an asset and related liability.

Accepted Answer

The answer of An lease is recorded on the lessee's...

Question 13

In general, the international accounting standards provide lease criteria that are similar to the U.S. standards.

Accepted Answer

A) True 
 B)False

Question 14

Micro Company wishes to issue $400,000 of 5-year, 6% bonds, with interest paid annually at the end of the year. The market rate of interest is currently 5%. What information is needed in order to determine the selling price?

Accepted Answer

A)  The market rate of interest, the stated rate of interest, the bond rating, and the bond life. 
B)  The face amount of the bonds, the stated rate of interest, the market rate of interest, and the bond life. 
C)  The life of the bonds, the market rate of interest, the bond rating, and the face amount of the bonds. 
D)  The face amount of the bonds, the market rate of interest, the purpose of the issue, and the bond life. 
A)  The market rate of interest, the stated rate of interest, the bond rating, and the bond life. 
B)  The face amount of the bonds, the stated rate of interest, the market rate of interest, and the bond life. 
C)  The life of the bonds, the market rate of interest, the bond rating, and the face amount of the bonds. 
D)  The face amount of the bonds, the market rate of interest, the purpose of the issue, and the bond life.

Question 15

Match the following bond and long-term liability related terms to the appropriate definition.
-The interest rate stated on the bond certificate. It is also called the nominal or coupon rate.

Accepted Answer

A) Long-term liability 
B) Face value 
C) Debenture bonds 
D) Serial bonds 
E) Callable bonds
F)Face rate of interest
G)Market rate of interest
H)Bond issue price
I)Premium
J)Discount
K)Effective interest method of amortization
L)Carrying value
M)Gain or loss on redemption 
A) Long-term liability 
B) Face value 
C) Debenture bonds 
D) Serial bonds 
E) Callable bonds
F)Face rate of interest
G)Market rate of interest
H)Bond issue price
I)Premium
J)Discount
K)Effective interest method of amortization
L)Carrying value
M)Gain or loss on redemption

Question 16

One example of a temporary difference between financial and tax reporting results from

Accepted Answer

A)  rent expense. 
B)  tax-exempt interest from municipal bonds. 
C)  life insurance proceeds resulting from the death of an executive. 
D)  depreciation of long-term assets. 
A)  rent expense. 
B)  tax-exempt interest from municipal bonds. 
C)  life insurance proceeds resulting from the death of an executive. 
D)  depreciation of long-term assets.

Question 17

The terms of a lease can only be structured in one way to meet the lessor and lessee and satisfy accounting standards.

Accepted Answer

A) True 
 B)False

Question 18

Amortized premium is computed annually when a bond is issued for other than its face value. For a bond issued at a premium, how will this component change as the bond approaches maturity?

Accepted Answer

A)  Decrease 
B)  Increase 
C)  Remain constant 
D)  Not enough information given to decide. 
A)  Decrease 
B)  Increase 
C)  Remain constant 
D)  Not enough information given to decide.

Question 19

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

Question 20

Because of changing market conditions, Friendly Corporation made the decision to redeem $300,000 of its bonds prior to maturity. The bonds had been issued at a discount and the balance in the discount account at the time of redemption was $15,000. The corporation's bond certificates indicated that the bonds could be retired early at 103. Friendly's retirement of the bonds would result in an

Accepted Answer

A)  loss of $24,000. 
B)  gain of $6,000. 
C)  decrease in owners' equity of $9,000. 
D)  increase in assets of $15,000. 
A)  loss of $24,000. 
B)  gain of $6,000. 
C)  decrease in owners' equity of $9,000. 
D)  increase in assets of $15,000.

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

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

Frank Crawford Corporation's balance sheet showed the following amounts: Current Liabilities, $15,000; Bonds Payable, $8,000; Lease Obligations, $9,000; and Notes Payable, $5,600. Total stockholders' equity was $17,000. The debt-to-equity ratio is:

On January 1, 2015, Clarkson, 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%. What is the carrying value of the bonds after the first interest payment is made on June 30, 2015?

If bonds were initially issued at a premium, the carrying value of the bonds on the issuer's books will

When a bond issue is retired early, the amount of unamortized discount or premium is not considered in the calculation of a gain or loss.

A lease is accounted for as a capital lease if the lease term is 75% or more of the property's economic life.

Review the information for Grenada Corporation. REQUIRED: The note disclosure mentions contingent rent payments. What do you think this means with regard to Grenada Corporation?

Match the following bond and long-term liability related terms to the appropriate definition. -An obligation that will not be satisfied within one year.

If bonds were initially issued at a discount, the interest expense on the bonds calculated using the effective interest method will

Neville Company issued $100,000 of 6%, 10 year bonds when the market rate of interest was 5%. The proceeds from this bond issue were $107,732. Using the effective interest method of amortization, which of the following statements is true? Assume interest is paid annually.

An lease is recorded on the lessee's balance sheet as an asset and related liability.

In general, the international accounting standards provide lease criteria that are similar to the U.S. standards.

Micro Company wishes to issue $400,000 of 5-year, 6% bonds, with interest paid annually at the end of the year. The market rate of interest is currently 5%. What information is needed in order to determine the selling price?

Match the following bond and long-term liability related terms to the appropriate definition. -The interest rate stated on the bond certificate. It is also called the nominal or coupon rate.

One example of a temporary difference between financial and tax reporting results from

The terms of a lease can only be structured in one way to meet the lessor and lessee and satisfy accounting standards.

Amortized premium is computed annually when a bond is issued for other than its face value. For a bond issued at a premium, how will this component change as the bond approaches maturity?

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

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

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

Frank Crawford Corporation's balance sheet showed the following amounts: Current Liabilities, $15,000; Bonds Payable, $8,000; Lease Obligations, $9,000; and Notes Payable, $5,600. Total stockholders' equity was $17,000. The debt-to-equity ratio is:

On January 1, 2015, Clarkson, 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%. What is the carrying value of the bonds after the first interest payment is made on June 30, 2015?

If bonds were initially issued at a premium, the carrying value of the bonds on the issuer's books will

When a bond issue is retired early, the amount of unamortized discount or premium is not considered in the calculation of a gain or loss.

A lease is accounted for as a capital lease if the lease term is 75% or more of the property's economic life.

Review the information for Grenada Corporation. REQUIRED: The note disclosure mentions contingent rent payments. What do you think this means with regard to Grenada Corporation?

Match the following bond and long-term liability related terms to the appropriate definition. -An obligation that will not be satisfied within one year.

If bonds were initially issued at a discount, the interest expense on the bonds calculated using the effective interest method will

Neville Company issued $100,000 of 6%, 10 year bonds when the market rate of interest was 5%. The proceeds from this bond issue were $107,732. Using the effective interest method of amortization, which of the following statements is true? Assume interest is paid annually.

An lease is recorded on the lessee's balance sheet as an asset and related liability.

In general, the international accounting standards provide lease criteria that are similar to the U.S. standards.

Micro Company wishes to issue $400,000 of 5-year, 6% bonds, with interest paid annually at the end of the year. The market rate of interest is currently 5%. What information is needed in order to determine the selling price?

Match the following bond and long-term liability related terms to the appropriate definition. -The interest rate stated on the bond certificate. It is also called the nominal or coupon rate.

One example of a temporary difference between financial and tax reporting results from

The terms of a lease can only be structured in one way to meet the lessor and lessee and satisfy accounting standards.

Amortized premium is computed annually when a bond is issued for other than its face value. For a bond issued at a premium, how will this component change as the bond approaches maturity?

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