Question 1

Match each term with the appropriate definition.Not all definitions will be used.
-Callable

Accepted Answer

A) When a bond is issued for a price greater than its face value. 
B) Also known as the face value or par value of a bond. 
C) Rate of interest that investors demand from a bond. 
D) A bond with the feature that allows creditors to exchange the bond for company stock. 
E) The amount a company receives when it sells a bond;also known as issue price.
F)The interest rate printed on the bond certificate.
G)The time at which the face value of a bond must be paid to the lender.
H)Is multiplied by the market interest rate to calculate the (effective)interest expense on a bond.
I)A bond feature that changes the interest rate on the bond with market conditions.
J)When a bond is issued for a price less than its face value.
K)A bond with the feature that allows the borrowing company to pay off a bond whenever it wishes.
L)A bond with the feature that lets creditors examine financial data and demand new loan conditions. 
A) When a bond is issued for a price greater than its face value. 
B) Also known as the face value or par value of a bond. 
C) Rate of interest that investors demand from a bond. 
D) A bond with the feature that allows creditors to exchange the bond for company stock. 
E) The amount a company receives when it sells a bond;also known as issue price.
F)The interest rate printed on the bond certificate.
G)The time at which the face value of a bond must be paid to the lender.
H)Is multiplied by the market interest rate to calculate the (effective)interest expense on a bond.
I)A bond feature that changes the interest rate on the bond with market conditions.
J)When a bond is issued for a price less than its face value.
K)A bond with the feature that allows the borrowing company to pay off a bond whenever it wishes.
L)A bond with the feature that lets creditors examine financial data and demand new loan conditions.

Question 2

The debt-to-assets ratio indicates financing risk by computing the proportion of total assets financed by debt.

Accepted Answer

A) True 
 B)False

Question 3

Bonds allow a company to borrow large sums of money from many different investors.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements best describes a contingent liability?

Accepted Answer

A) The amount of a contingent liability is known and will definitely have to be paid in the future. 
B) A contingent liability is a potential liability that has arisen because of a past transaction or event,but its ultimate outcome will not be known until a future event occurs or fails to occur. 
C) A contingent liability will only be incurred if a particular future event takes place. 
D) A contingent liability is a potential liability that will be incurred if a natural disaster happens. 
A) The amount of a contingent liability is known and will definitely have to be paid in the future. 
B) A contingent liability is a potential liability that has arisen because of a past transaction or event,but its ultimate outcome will not be known until a future event occurs or fails to occur. 
C) A contingent liability will only be incurred if a particular future event takes place. 
D) A contingent liability is a potential liability that will be incurred if a natural disaster happens.

Question 5

Accrued liabilities could include all of the following except:

Accepted Answer

A) Wages and Salaries Payable. 
B) Current Portion of Long-Term Debt. 
C) Income Tax Payable. 
D) Interest Payable. 
A) Wages and Salaries Payable. 
B) Current Portion of Long-Term Debt. 
C) Income Tax Payable. 
D) Interest Payable.

Question 6

ABC Company received $9,631 for its 5-year,10% bonds with a total face value of $10,000.The market rate of interest was 11%.The bonds pay interest annually on December 31.How much interest expense will ABC Corporation record on the first annual interest payment date using the effective-interest method?

Accepted Answer

A) $1,059.41 
B) $1,000 
C) $1,100 
D) $963.10 
A) $1,059.41 
B) $1,000 
C) $1,100 
D) $963.10

Question 7

When a bond is issued at more than its face value,it is issued at:

Accepted Answer

A) a surplus. 
B) par value. 
C) a discount. 
D) a premium. 
A) a surplus. 
B) par value. 
C) a discount. 
D) a premium.

Question 8

The discount on a bonds payable becomes:

Accepted Answer

A) additional interest expense in only the year the bonds are issued. 
B) additional interest expense over the life of the bonds. 
C) a reduction in interest expense in only the year the bonds mature. 
D) a reduction in interest expense over the life of the bonds. 
A) additional interest expense in only the year the bonds are issued. 
B) additional interest expense over the life of the bonds. 
C) a reduction in interest expense in only the year the bonds mature. 
D) a reduction in interest expense over the life of the bonds.

Question 9

No mention is required in the financial statements for contingent liabilities that are:

Accepted Answer

A) probable. 
B) remote. 
C) possible. 
D) likely. 
A) probable. 
B) remote. 
C) possible. 
D) likely.

Question 10

The three key pieces of information that are stated on a bond certificate are the:

Accepted Answer

A) interest payment,the face value of the bond,and the credit rating of the company. 
B) market interest rate,the price of the bond,and the maturity date. 
C) stated interest rate,the face value of the bond,and the maturity date. 
D) interest payment,the issue price of the bond,and the credit rating of the company. 
A) interest payment,the face value of the bond,and the credit rating of the company. 
B) market interest rate,the price of the bond,and the maturity date. 
C) stated interest rate,the face value of the bond,and the maturity date. 
D) interest payment,the issue price of the bond,and the credit rating of the company.

Question 11

The following data came from the financial statements of Sawyer Company: $\begin{array}{lr}
\text { Total Assets } & \$ 369,000 \
\text { Total Liabilities } & 171,000 \
\text { Total Stockholders' Equity } & 198,000 \
\text { Income Tax Expense } & 7,200 \
\text { Interest Expense } & 900 \
\text { Net Income } & 117,000
\end{array}$ What is the Sawyer's times interest earned ratio?

Accepted Answer

A) 130 
B) 129 
C) 122 
D) 139 
A) 130 
B) 129 
C) 122 
D) 139

Question 12

Diana Olympic works 40 hours for Quartz,Inc.for $27 per hour.Required payroll deductions are: Social Security $66.96;Medicare $15.66;Federal income tax $104.40;and State income tax $18.00.The entry to record her net pay would cause which of the following to change as described?

Accepted Answer

A) Salaries and Wages Expense increases by $1,080. 
B) Salaries and Wages Expense decreases by $1,080. 
C) Salaries and Wages Payable increases by $1,080. 
D) Salaries and Wages Payable decreases by $1,080. 
A) Salaries and Wages Expense increases by $1,080. 
B) Salaries and Wages Expense decreases by $1,080. 
C) Salaries and Wages Payable increases by $1,080. 
D) Salaries and Wages Payable decreases by $1,080.

Question 13

Culver,Inc.issues $250,000 of 10-year,10% bonds on January 1,2018.
Required:
Determine the amounts (bonds payable,unamortized premium or discount,and bonds payable,net)that will be reported on a balance sheet prepared as of the date of issuance of January 1,2018 under each of the following assumptions:
Part a.The bonds are sold at 100.
Part b.The bonds are sold at 104.
Part c.The bonds are sold at 98.

Accepted Answer

The answer of Culver,Inc.issues $250,000 of 10-year,10% bonds on January...

Question 14

The Big Co.issued $100,000 of bonds for their face value six years ago.This year,it retires the bonds for $105,000.As a result of retiring these bonds,it:

Accepted Answer

A) reduces its liabilities by $105,000. 
B) reduces its assets by $100,000. 
C) reports a gain of $5,000. 
D) reports a loss of $5,000. 
A) reduces its liabilities by $105,000. 
B) reduces its assets by $100,000. 
C) reports a gain of $5,000. 
D) reports a loss of $5,000.

Question 15

On January 1,Mallory Company issued $400,000 of 8%,5-year bonds when the market rate of interest was 6%.The bonds were issued for $433,698 and interest will be paid annually on December 31.How much premium amortization will Mallory record on the first interest payment date using the effective-interest method?

Accepted Answer

A) $0 
B) $26,021.88 
C) $32,000 
D) $5,978.12 
A) $0 
B) $26,021.88 
C) $32,000 
D) $5,978.12

Question 16

The following information is available from the most recent financial statements of the Attaché Corporation: $\begin{array}{lr}
\text { Total Assets } & \$ 800,000 \
\text { Net Income } & 120,000 \
\text { Average total liabilities } & 400,000 \
\text { Sales revenue } & 1,500,000 \
\text { Total liabilities } & 500,000 \
\text { Average total assets } & 700,000
\end{array}$ What is the debt-to-asset ratio?

Accepted Answer

A) 57.1% 
B) 62.5% 
C) 160% 
D) 175% 
A) 57.1% 
B) 62.5% 
C) 160% 
D) 175%

Question 17

On December 1,2018,Foggy Bottom Co.borrowed $360,000 from Atlantic National Bank,and signed a 9% note payable due in one year.Interest on the note is due at maturity.
Required:
Part a.Prepare the journal entry to record the borrowing transaction.
Part b.Prepare the required adjusting entry on December 31,2018.
Part c.Prepare the journal entry to record the payment of the interest on December 1,2019.
Part d.Prepare the journal entry to record the payment of the note on December 1,2019.

Accepted Answer

Part a
 @#IMG-DLM&

Question 18

Payroll deductions:

Accepted Answer

A) are amounts added to employees' gross earnings to determine their net pay. 
B) all voluntary increase the amount of cash an employee receives. 
C) are amounts subtracted from employees' gross earnings to determine their net pay. 
D) are all accounted for as expenses. 
A) are amounts added to employees' gross earnings to determine their net pay. 
B) all voluntary increase the amount of cash an employee receives. 
C) are amounts subtracted from employees' gross earnings to determine their net pay. 
D) are all accounted for as expenses.

Question 19

Your company sells $50,000 of one-year,10% bonds for an issue price of $52,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Accepted Answer

A) $50,000. 
B) $52,000. 
C) $55,000. 
D) $57,000. 
A) $50,000. 
B) $52,000. 
C) $55,000. 
D) $57,000.

Question 20

Match each term with the appropriate definition.Not all definitions will be used.
-Carrying value

Accepted Answer

A) When a bond is issued for a price greater than its face value. 
B) Also known as the face value or par value of a bond. 
C) Rate of interest that investors demand from a bond. 
D) A bond with the feature that allows creditors to exchange the bond for company stock. 
E) The amount a company receives when it sells a bond;also known as issue price.
F)The interest rate printed on the bond certificate.
G)The time at which the face value of a bond must be paid to the lender.
H)Is multiplied by the market interest rate to calculate the (effective)interest expense on a bond.
I)A bond feature that changes the interest rate on the bond with market conditions.
J)When a bond is issued for a price less than its face value.
K)A bond with the feature that allows the borrowing company to pay off a bond whenever it wishes.
L)A bond with the feature that lets creditors examine financial data and demand new loan conditions. 
A) When a bond is issued for a price greater than its face value. 
B) Also known as the face value or par value of a bond. 
C) Rate of interest that investors demand from a bond. 
D) A bond with the feature that allows creditors to exchange the bond for company stock. 
E) The amount a company receives when it sells a bond;also known as issue price.
F)The interest rate printed on the bond certificate.
G)The time at which the face value of a bond must be paid to the lender.
H)Is multiplied by the market interest rate to calculate the (effective)interest expense on a bond.
I)A bond feature that changes the interest rate on the bond with market conditions.
J)When a bond is issued for a price less than its face value.
K)A bond with the feature that allows the borrowing company to pay off a bond whenever it wishes.
L)A bond with the feature that lets creditors examine financial data and demand new loan conditions.

Match each term with the appropriate definition.Not all definitions will be used. -Callable

The debt-to-assets ratio indicates financing risk by computing the proportion of total assets financed by debt.

Bonds allow a company to borrow large sums of money from many different investors.

Which of the following statements best describes a contingent liability?

Accrued liabilities could include all of the following except:

When a bond is issued at more than its face value,it is issued at:

The discount on a bonds payable becomes:

No mention is required in the financial statements for contingent liabilities that are:

The three key pieces of information that are stated on a bond certificate are the:

The following data came from the financial statements of Sawyer Company: Total Assets \ 369,000 Total Liabilities 171,000 Total Stockholders' Equity 198,000 Income Tax Expense 7,200 Interest Expense 900 Net Income 117,000 What is the Sawyer's times interest earned ratio?

Diana Olympic works 40 hours for Quartz,Inc.for $27 per hour.Required payroll deductions are: Social Security $66.96;Medicare $15.66;Federal income tax $104.40;and State income tax $18.00.The entry to record her net pay would cause which of the following to change as described?

The Big Co.issued $100,000 of bonds for their face value six years ago.This year,it retires the bonds for $105,000.As a result of retiring these bonds,it:

The following information is available from the most recent financial statements of the Attaché Corporation: Total Assets \ 800,000 Net Income 120,000 Average total liabilities 400,000 Sales revenue 1,500,000 Total liabilities 500,000 Average total assets 700,000 What is the debt-to-asset ratio?

Payroll deductions:

Your company sells $50,000 of one-year,10% bonds for an issue price of $52,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Match each term with the appropriate definition.Not all definitions will be used. -Carrying value

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 10: Liabilities

Match each term with the appropriate definition.Not all definitions will be used. -Callable

The debt-to-assets ratio indicates financing risk by computing the proportion of total assets financed by debt.

Bonds allow a company to borrow large sums of money from many different investors.

Which of the following statements best describes a contingent liability?

Accrued liabilities could include all of the following except:

When a bond is issued at more than its face value,it is issued at:

The discount on a bonds payable becomes:

No mention is required in the financial statements for contingent liabilities that are:

The three key pieces of information that are stated on a bond certificate are the:

The following data came from the financial statements of Sawyer Company: Total Assets \ 369,000 Total Liabilities 171,000 Total Stockholders' Equity 198,000 Income Tax Expense 7,200 Interest Expense 900 Net Income 117,000 What is the Sawyer's times interest earned ratio?

Diana Olympic works 40 hours for Quartz,Inc.for $27 per hour.Required payroll deductions are: Social Security $66.96;Medicare $15.66;Federal income tax $104.40;and State income tax $18.00.The entry to record her net pay would cause which of the following to change as described?

The Big Co.issued $100,000 of bonds for their face value six years ago.This year,it retires the bonds for $105,000.As a result of retiring these bonds,it:

The following information is available from the most recent financial statements of the Attaché Corporation: Total Assets \ 800,000 Net Income 120,000 Average total liabilities 400,000 Sales revenue 1,500,000 Total liabilities 500,000 Average total assets 700,000 What is the debt-to-asset ratio?

Payroll deductions:

Your company sells $50,000 of one-year,10% bonds for an issue price of $52,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Match each term with the appropriate definition.Not all definitions will be used. -Carrying value

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters