Question 1

A non-current note is always secured.

Accepted Answer

A) True 
 B)False  False

Question 2

On Jan 1, 2013, Dawson Corporation borrows $300,000 and signs a 5-year, 6% note payable. Blended monthly payments of $5,800 are required, beginning Feb 1, 2013.
a. Record the journal entry for Dawson on January 1.
b. Record the journal entry for Dawson on February 1.

Accepted Answer

The answer of On Jan 1, 2013, Dawson Corporation borrows...

Question 3

When bonds are issued at face value, the market interest rate is equal to the contractual interest rate.

Accepted Answer

A) True 
 B)False  True

Question 4

The total cost of borrowing on a 10 year, 4%, $1,000 bond that is sold for $970 is:

Accepted Answer

A)  $370. 
B)  $400. 
C)  $430. 
D)  $970. 
A)  $370. 
B)  $400. 
C)  $430. 
D)  $970.

Question 5

The amount that must be invested today at current interest rates in order to receive a specified sum of money at a specified date is the present value.

Accepted Answer

A) True 
 B)False

Question 6

Bond prices are quoted as a percentage of the face value of the bonds.

Accepted Answer

A) True 
 B)False

Question 7

Castaway Corporation borrows $300,000 and signs a 6%, 5 year note. Monthly payments will include a fixed amount of principal, plus interest on the unpaid balance. The first payment will be:

Accepted Answer

A)  $5,000. 
B)  $6,500. 
C)  $18,000. 
D)  $23,000. 
A)  $5,000. 
B)  $6,500. 
C)  $18,000. 
D)  $23,000.

Question 8

A variable interest rate changes as market rates change.

Accepted Answer

A) True 
 B)False

Question 9

Bonds with a face value of $1,000,000 and a carrying value of $975,000 are retired at 99, after paying semi-annual interest. The gain or loss is:

Accepted Answer

A)  $15,000 loss. 
B)  $10,000 loss. 
C)  $10,000 gain. 
D)  $15,000 gain. 
A)  $15,000 loss. 
B)  $10,000 loss. 
C)  $10,000 gain. 
D)  $15,000 gain.

Question 10

Bonds with a higher contractual interest rate than the market rate for similar bonds will probably sell at a discount.

Accepted Answer

A) True 
 B)False

Question 11

What are two advantages of debt over equity financing?

Accepted Answer

Any two of the following:
Shar

Question 12

If bonds payable are issued at a discount, the contractual interest rate is:

Accepted Answer

A)  higher than the market rate of interest. 
B)  lower than the market rate of interest. 
C)  equal to the market rate of interest. 
D)  changed to reflect the market rate of interest. 
A)  higher than the market rate of interest. 
B)  lower than the market rate of interest. 
C)  equal to the market rate of interest. 
D)  changed to reflect the market rate of interest.

Question 13

At what amount do bonds trade at on the market?

Accepted Answer

Bonds trade at the p

Question 14

When a note payable is repaid with blended payments, the same amount of principal is repaid with each payment.

Accepted Answer

A) True 
 B)False

Question 15

The portion of a non-current note that will be repaid within the next year is shown as a current liability on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 16

Select the appropriate word or phrase from the table to complete the following statements correctly:
a. When the market rate exceeds the contractual interest rate, bonds will sell at _________________________________.
b. Cash paid to bondholders each period is calculated by multiplying the _________________________ by the __________________________.
c. When bonds are issued at a discount, the total cost of borrowing will equal the sum of the periodic interest payments _______________ the discount.
d. The carrying value of the bond moves towards the _____________________.

Accepted Answer

a. discount
b. face

A non-current note is always secured.

On Jan 1, 2013, Dawson Corporation borrows $300,000 and signs a 5-year, 6% note payable. Blended monthly payments of $5,800 are required, beginning Feb 1, 2013. a. Record the journal entry for Dawson on January 1. b. Record the journal entry for Dawson on February 1.

When bonds are issued at face value, the market interest rate is equal to the contractual interest rate.

The total cost of borrowing on a 10 year, 4%, $1,000 bond that is sold for $970 is:

The amount that must be invested today at current interest rates in order to receive a specified sum of money at a specified date is the present value.

Bond prices are quoted as a percentage of the face value of the bonds.

Castaway Corporation borrows $300,000 and signs a 6%, 5 year note. Monthly payments will include a fixed amount of principal, plus interest on the unpaid balance. The first payment will be:

A variable interest rate changes as market rates change.

Bonds with a face value of $1,000,000 and a carrying value of $975,000 are retired at 99, after paying semi-annual interest. The gain or loss is:

Bonds with a higher contractual interest rate than the market rate for similar bonds will probably sell at a discount.

What are two advantages of debt over equity financing?

If bonds payable are issued at a discount, the contractual interest rate is:

At what amount do bonds trade at on the market?

When a note payable is repaid with blended payments, the same amount of principal is repaid with each payment.

The portion of a non-current note that will be repaid within the next year is shown as a current liability on the balance sheet.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities

Financial Reporting Concepts

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and IFRS

The Cash Flow Statement

Financial Statement Analysis

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Exam 15: Non-Current Liabilities

A non-current note is always secured.

On Jan 1, 2013, Dawson Corporation borrows $300,000 and signs a 5-year, 6% note payable. Blended monthly payments of $5,800 are required, beginning Feb 1, 2013. a. Record the journal entry for Dawson on January 1. b. Record the journal entry for Dawson on February 1.

When bonds are issued at face value, the market interest rate is equal to the contractual interest rate.

The total cost of borrowing on a 10 year, 4%, $1,000 bond that is sold for $970 is:

The amount that must be invested today at current interest rates in order to receive a specified sum of money at a specified date is the present value.

Bond prices are quoted as a percentage of the face value of the bonds.

Castaway Corporation borrows $300,000 and signs a 6%, 5 year note. Monthly payments will include a fixed amount of principal, plus interest on the unpaid balance. The first payment will be:

A variable interest rate changes as market rates change.

Bonds with a face value of $1,000,000 and a carrying value of $975,000 are retired at 99, after paying semi-annual interest. The gain or loss is:

Bonds with a higher contractual interest rate than the market rate for similar bonds will probably sell at a discount.

What are two advantages of debt over equity financing?

If bonds payable are issued at a discount, the contractual interest rate is:

At what amount do bonds trade at on the market?

When a note payable is repaid with blended payments, the same amount of principal is repaid with each payment.

The portion of a non-current note that will be repaid within the next year is shown as a current liability on the balance sheet.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities

Financial Reporting Concepts

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and IFRS

The Cash Flow Statement

Financial Statement Analysis

Filters