Question 1

The present value of an annuity can be best or quickly computed as the sum of the individual future values for each payment.

Accepted Answer

A) True 
 B)False

Question 2

Hornet Corporation has a loan agreement that provides it with cash today,and the company must pay $25,000 one year from today,$15,000 two years from today,and $5,000 three years from today.Hornet agrees to pay 10% interest.The following are factors from a present value table:
   What is the amount of cash that Hornet receives today?

Accepted Answer

The answer of Hornet Corporation has a loan agreement that...

Question 3

Describe the recording procedures for the issuance,retirement,and paying of interest for notes.

Accepted Answer

At issuance,the proceeds from a note mus

Question 4

A company purchased equipment and signed a 7-year installment loan at 9% annual interest.The annual payments equal $9,000.The present value of an annuity for 7 years at 9% is 5.0330.The present value of the loan is:

Accepted Answer

A) $ 9,000. 
B) $ 5,033. 
C) $63,000. 
D) $57,330. 
E) $45,297. 
A) $ 9,000. 
B) $ 5,033. 
C) $63,000. 
D) $57,330. 
E) $45,297.

Question 5

How are bond issue prices determined?

Accepted Answer

The issue price of bonds is found by com

Question 6

A lease is a contractual agreement between a lessor and a lessee that grants the lessee the right to use the asset for a period of time in return for cash payment(s)to the lessor.

Accepted Answer

A) True 
 B)False

Question 7

Adidas issued 10-year,8% bonds with a par value of $200,000.Interest is paid semiannually.The market rate on the issue date was 7.5%.Adidas received $206,948 in cash proceeds.Which of the following statements is true?

Accepted Answer

A) Adidas must pay $200,000 at maturity and no interest payments. 
B) Adidas must pay $206,948 at maturity and no interest payments. 
C) Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each. 
D) Adidas must pay $206,948 at maturity plus 20 interest payments of $8,000 each. 
E) Adidas must pay $200,000 at maturity plus 20 interest payments of $7,500 each. 
A) Adidas must pay $200,000 at maturity and no interest payments. 
B) Adidas must pay $206,948 at maturity and no interest payments. 
C) Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each. 
D) Adidas must pay $206,948 at maturity plus 20 interest payments of $8,000 each. 
E) Adidas must pay $200,000 at maturity plus 20 interest payments of $7,500 each.

Question 8

Match each of the following terms with the appropriate definitions.

-Hybrid manufacturing system

Accepted Answer

A) Costing system to determine the cost of producing each job or job lot. 
B) Document that summarizes the materials a department uses during a reporting period; replaces materials requisition. 
C) Report of costs charged to a department, its equivalent units of production achieved, even the costs assigned to its output. 
D) A manufacturing system that contains features of both process and job order systems. 
E) Number of units that would be completed if all effort during a period had been applied to units that were started and finished.
F)System of assigning direct materials, direct labor, and overhead to specific processes; total costs associated with each process are then divided by the number of units passing through that process to determine cost per equivalent unit.
G)Process of products in a continuous flow of steps. 
A) Costing system to determine the cost of producing each job or job lot. 
B) Document that summarizes the materials a department uses during a reporting period; replaces materials requisition. 
C) Report of costs charged to a department, its equivalent units of production achieved, even the costs assigned to its output. 
D) A manufacturing system that contains features of both process and job order systems. 
E) Number of units that would be completed if all effort during a period had been applied to units that were started and finished.
F)System of assigning direct materials, direct labor, and overhead to specific processes; total costs associated with each process are then divided by the number of units passing through that process to determine cost per equivalent unit.
G)Process of products in a continuous flow of steps.

Question 9

The carrying (book)value of a bond payable is the par value of the bonds plus the discount.

Accepted Answer

A) True 
 B)False

Question 10

When applying equal total payments to a note,with each payment the amount applied to the note principal ____________ while the interest expense for the note _____________.

Accepted Answer

answers m

Question 11

If a bond's interest period does not coincide with the issuing company's accounting period,an adjusting entry is necessary to recognize bond interest expense accruing since the most recent interest payment.

Accepted Answer

A) True 
 B)False

Question 12

Match each of the following terms with the appropriate definitions.

-Process cost accounting system

Accepted Answer

A) Costing system to determine the cost of producing each job or job lot. 
B) Document that summarizes the materials a department uses during a reporting period; replaces materials requisition. 
C) Report of costs charged to a department, its equivalent units of production achieved, even the costs assigned to its output. 
D) A manufacturing system that contains features of both process and job order systems. 
E) Number of units that would be completed if all effort during a period had been applied to units that were started and finished.
F)System of assigning direct materials, direct labor, and overhead to specific processes; total costs associated with each process are then divided by the number of units passing through that process to determine cost per equivalent unit.
G)Process of products in a continuous flow of steps. 
A) Costing system to determine the cost of producing each job or job lot. 
B) Document that summarizes the materials a department uses during a reporting period; replaces materials requisition. 
C) Report of costs charged to a department, its equivalent units of production achieved, even the costs assigned to its output. 
D) A manufacturing system that contains features of both process and job order systems. 
E) Number of units that would be completed if all effort during a period had been applied to units that were started and finished.
F)System of assigning direct materials, direct labor, and overhead to specific processes; total costs associated with each process are then divided by the number of units passing through that process to determine cost per equivalent unit.
G)Process of products in a continuous flow of steps.

Question 13

A company's ability to issue unsecured debt depends on its credit standing.

Accepted Answer

A) True 
 B)False

Question 14

On October 1,a $30,000,6%,3-year installment note payable is issued by a company.The note requires equal payments of principal plus accrued interest be paid at the end of each year on September 30.The present value of an annuity factor for 3 years at 6% is 2.6730.The payment will be:

Accepted Answer

A) $10,000.00. 
B) $11,223.34. 
C) $10,800.00. 
D) $10,400.00. 
E) $1,223.34. 
A) $10,000.00. 
B) $11,223.34. 
C) $10,800.00. 
D) $10,400.00. 
E) $1,223.34.

Question 15

Walker Corporation issued 14%,5-year bonds with a par value of $5,000,000 on January 1,Year 1.Interest is to be paid semiannually on each June 30 and December 31.The bonds are issued at $5,368,035 cash when the market rate for this bond is 12%.
(a)Prepare the general journal entry to record the issuance of the bonds on January 1,year 1.
(b)Show how the bonds would be reported on Walker's balance sheet at January 1,Year 1.
(c)Assume that Walker uses the effective interest method of amortization of any discount or premium on bonds.Prepare the general journal entry to record the first semiannual interest payment on June 30,Year 1.
(d)Assume instead that Walker uses the straight-line method of amortization of any discount or premium on bonds.Prepare the general journal entry to record the first semiannual interest payment on June 30,Year 1.

Accepted Answer

The answer of Walker Corporation issued 14%,5-year bonds with a...

Question 16

Operating leases are long-term or noncancelable leases in which the lessor transfers substantially all the risks and rewards of ownership to the lessee.

Accepted Answer

A) True 
 B)False

Question 17

A basic present value concept is that cash paid or received in the future is worth more than the same amount of cash received today.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following accurately describes a debenture?

Accepted Answer

A) A legal contract between the bond issuer and the bondholders. 
B) A type of bond issued in the names and addresses of the bondholders. 
C) A type of bond which requires the bond issuer to create a sinking fund of assets set aside at specified amounts and dates to repay the bonds. 
D) A type of bond which is not collateralized but backed only by the issuer's general credit standing. 
E) A type of bond that can be exchanged for a fixed number of shares of the issuing corporation's common stock. 
A) A legal contract between the bond issuer and the bondholders. 
B) A type of bond issued in the names and addresses of the bondholders. 
C) A type of bond which requires the bond issuer to create a sinking fund of assets set aside at specified amounts and dates to repay the bonds. 
D) A type of bond which is not collateralized but backed only by the issuer's general credit standing. 
E) A type of bond that can be exchanged for a fixed number of shares of the issuing corporation's common stock.

Question 19

Match each of the following terms with the appropriate definitions.

-Process manufacturing system

Accepted Answer

A) Costing system to determine the cost of producing each job or job lot. 
B) Document that summarizes the materials a department uses during a reporting period; replaces materials requisition. 
C) Report of costs charged to a department, its equivalent units of production achieved, even the costs assigned to its output. 
D) A manufacturing system that contains features of both process and job order systems. 
E) Number of units that would be completed if all effort during a period had been applied to units that were started and finished.
F)System of assigning direct materials, direct labor, and overhead to specific processes; total costs associated with each process are then divided by the number of units passing through that process to determine cost per equivalent unit.
G)Process of products in a continuous flow of steps. 
A) Costing system to determine the cost of producing each job or job lot. 
B) Document that summarizes the materials a department uses during a reporting period; replaces materials requisition. 
C) Report of costs charged to a department, its equivalent units of production achieved, even the costs assigned to its output. 
D) A manufacturing system that contains features of both process and job order systems. 
E) Number of units that would be completed if all effort during a period had been applied to units that were started and finished.
F)System of assigning direct materials, direct labor, and overhead to specific processes; total costs associated with each process are then divided by the number of units passing through that process to determine cost per equivalent unit.
G)Process of products in a continuous flow of steps.

Question 20

A company has assets of $350,000 and total liabilities of $200,000.Its debt-to-equity ratio is 0.6.

Accepted Answer

A) True 
 B)False

Exam 14: Long-Term Liabilities

The present value of an annuity can be best or quickly computed as the sum of the individual future values for each payment.

Describe the recording procedures for the issuance,retirement,and paying of interest for notes.

A company purchased equipment and signed a 7-year installment loan at 9% annual interest.The annual payments equal $9,000.The present value of an annuity for 7 years at 9% is 5.0330.The present value of the loan is:

How are bond issue prices determined?

A lease is a contractual agreement between a lessor and a lessee that grants the lessee the right to use the asset for a period of time in return for cash payment(s)to the lessor.

Adidas issued 10-year,8% bonds with a par value of $200,000.Interest is paid semiannually.The market rate on the issue date was 7.5%.Adidas received $206,948 in cash proceeds.Which of the following statements is true?

Match each of the following terms with the appropriate definitions. -Hybrid manufacturing system

The carrying (book)value of a bond payable is the par value of the bonds plus the discount.

When applying equal total payments to a note,with each payment the amount applied to the note principal ____________ while the interest expense for the note _____________.

If a bond's interest period does not coincide with the issuing company's accounting period,an adjusting entry is necessary to recognize bond interest expense accruing since the most recent interest payment.

Match each of the following terms with the appropriate definitions. -Process cost accounting system

A company's ability to issue unsecured debt depends on its credit standing.

On October 1,a $30,000,6%,3-year installment note payable is issued by a company.The note requires equal payments of principal plus accrued interest be paid at the end of each year on September 30.The present value of an annuity factor for 3 years at 6% is 2.6730.The payment will be:

Operating leases are long-term or noncancelable leases in which the lessor transfers substantially all the risks and rewards of ownership to the lessee.

A basic present value concept is that cash paid or received in the future is worth more than the same amount of cash received today.

Which of the following accurately describes a debenture?

Match each of the following terms with the appropriate definitions. -Process manufacturing system

A company has assets of $350,000 and total liabilities of $200,000.Its debt-to-equity ratio is 0.6.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

Filters

When applying equal total payments to a note,with each payment the amount applied to the note principal while the interest expense for the note _.