Exam 10: Long-Term Liabilities

The current balance sheet of Blawnox Inc.reports total assets of $20 million,total liabilities of $2 million,and owners' equity of $18 million.Blawnox Inc.is considering several financing possibilities in order to expand operations.If Blawnox Inc.'s owner invests an additional $2 million to finance the expansion,the debt-to-equity ratio

In an operating lease,the lessee acquires the right to use an asset for only a limited period of time.

An alternate term for a timing difference is a __________.

__________ bonds may be retired by the issuing company before their specified due date.

Convertible bonds are attractive to investors because

The Premium on Bonds Payable account is shown on the balance sheet as a(n)

Bonds are sold at a premium if the

Which of the following statements regarding amortization is true?

If the market rate of interest is greater than the face rate,then the bonds are issued at a(n)__________.

Flagg Company issued $500,000 of bonds for $498,351.Interest is paid semiannually.The bond markets and the financial press are likely to state the bond issue price as

Connor Martin Corporation's balance sheet showed the following amounts: Current Liabilities,$10,000;Bonds Payable,$3,000;Lease Obligations,$4,000;and Notes Payable,$600.Total stockholders' equity was $12,000.The debt-to-equity ratio is

When a lease is classified as an operating lease,the lease liability should be presented on the balance sheet of the lessee.

Bonds are generally issued in denominations of $1,000.

The Deferred Tax account should reflect permanent differences but not items that are temporary differences between book accounting and tax reporting.

An amortized discount is computed annually when a bond is issued for other than its face value.For a bond issued at a discount,how will this component change under the effective interest method as the bond approaches maturity?

A decreasing long-term liability account is presented on the statement of cash flows as

On January 1,2017,Sharpsburg,Inc.issued $400,000,ten-year,10% bonds for $354,200.The bonds pay interest on June 30 and December 31.The market rate is 12%.The cash payment on June 30,2017,is

__________ is either the bond's face value minus any unamortized discount or plus any unamortized premium.

The current balance sheet of Blawnox Inc.reports total assets of $20 million,total liabilities of $2 million,and owners' equity of $18 million.Blawnox Inc.is considering several financing possibilities in order to expand operations.What is the additional amount that Blawnox Inc.can borrow and not exceed a debt-to-equity ratio of 0.3?

Deferred tax is an amount that reconciles the differences between the income for financial purposes with the income reported for tax purposes.In most cases,it is a long-term liability.