Question 1

Some financial analysts contend that reporting debt at amortized historical cost rather than current market value

Accepted Answer

A) makes it more difficult to manipulate accounting numbers. 
B) makes it easier to manipulate accounting numbers. 
C) has no impact on the accounting numbers. 
D) makes it impossible to manipulate the accounting numbers. 
A) makes it more difficult to manipulate accounting numbers. 
B) makes it easier to manipulate accounting numbers. 
C) has no impact on the accounting numbers. 
D) makes it impossible to manipulate the accounting numbers.

Question 2

A hedge of the exposure to changes in the fair market value of an existing asset or liability or a firm commitment is a fair value hedge.

Accepted Answer

A) True 
 B)False

Question 3

The Ness Company sells $5,000,000 of five-year,10% bonds at the start of the year.The bonds have an effective yield of 9%.Present value factors are below: $$\begin{array} { l c c } 
& \underline { \mathbf { 1 0 } \% } & \underline { \mathbf { 9 \% } } \
\text { PV \$1 factor 1 year } & 0.90909 & 0.91743 \
\text { PV \$1 factor 2 years } & 0.82645 & 0.84168 \
\text { PV \$1 factor 3 years } & 0.75131 & 0.77218 \
\text { PV \$1 factor 4 years } & 0.68301 & 0.70843 \
\text { PV \$1 factor 5 years } & 0.62092 & 0.64993
\end{array}$$
The bond interest expense for Year 1 is

Accepted Answer

A) $467,503. 
B) $500,000. 
C) $532,497. 
D) $538,895. 
A) $467,503. 
B) $500,000. 
C) $532,497. 
D) $538,895.

Question 4

Amortization of discount on bonds payable (bond discount)results in which of the following?

Accepted Answer

A) A decrease in bond interest expense 
B) An increase in net income 
C) An increase in the carrying value of the bond 
D) An increase in stockholders' equity due to the decrease in bond interest expense 
A) A decrease in bond interest expense 
B) An increase in net income 
C) An increase in the carrying value of the bond 
D) An increase in stockholders' equity due to the decrease in bond interest expense

Question 5

The intent of covenants in debt agreements is to discourage lender fraud.

Accepted Answer

A) True 
 B)False

Some financial analysts contend that reporting debt at amortized historical cost rather than current market value

A hedge of the exposure to changes in the fair market value of an existing asset or liability or a firm commitment is a fair value hedge.

Amortization of discount on bonds payable (bond discount)results in which of the following?

The intent of covenants in debt agreements is to discourage lender fraud.

The Economic and Institutional Setting for Financial Reporting

Accrual Accounting and Income Determination

Additional Topics in Income Determination

Structure of the Balance Sheet and Statement of Cash Flows

Essentials of Financial Statement Analysis

The Role of Financial Information in Valuation and Credit Risk Assessment

The Role of Financial Information in Contracting

Receivables

Inventories

Long-Lived Assets

Financial Reporting for Leases

Income Tax Reporting

Pensions and Postretirement Benefits

Financial Reporting for Owners Equity

Intercorporate Equity Investments

Statement of Cash Flows

Filters

Exam 11: Financial Instruments As Liabilities

Some financial analysts contend that reporting debt at amortized historical cost rather than current market value

A hedge of the exposure to changes in the fair market value of an existing asset or liability or a firm commitment is a fair value hedge.

Amortization of discount on bonds payable (bond discount)results in which of the following?

The intent of covenants in debt agreements is to discourage lender fraud.

The Economic and Institutional Setting for Financial Reporting

Accrual Accounting and Income Determination

Additional Topics in Income Determination

Structure of the Balance Sheet and Statement of Cash Flows

Essentials of Financial Statement Analysis

The Role of Financial Information in Valuation and Credit Risk Assessment

The Role of Financial Information in Contracting

Receivables

Inventories

Long-Lived Assets

Financial Reporting for Leases

Income Tax Reporting

Pensions and Postretirement Benefits

Financial Reporting for Owners Equity

Intercorporate Equity Investments

Statement of Cash Flows

Filters