Question 1

When a bond is retired early and the redemption price is greater than the bond's carrying value,there will be a(n)__________ on redemption.

Accepted Answer

The answer of When a bond is retired early and...

Question 2

All liabilities that are not classified as current liabilities are classified as __________.

Accepted Answer

The answer of All liabilities that are not classified as...

Question 3

Bonds are typically issued in denominations of $10,000.

Accepted Answer

A) True 
 B)False

Question 4

How do most changes in long-term liabilities on the balance sheet appear on the cash flow statement?

Accepted Answer

Most long-term liabilities are related t

Question 5

On January 2,2017,Garage Master Construction,Inc.issued $500,000,ten-year bonds for $574,540.The bonds pay interest on June 30 and December 31.The face rate is 8% and the market rate is 6%.The interest expense on the bonds at June 30,2017,is

Accepted Answer

A) $2,764. 
B) $17,236. 
C) $20,000. 
D) $22,764. 
A) $2,764. 
B) $17,236. 
C) $20,000. 
D) $22,764.

Question 6

For 2017,Wasabi Company has accounting revenues of $6,000.However,because of temporary differences between tax and accounting,$1,000 of this is not subject to tax.If expenses are $3,000 for both tax and accounting,and the tax rate is 40%,what is the amount of tax payable to the IRS?

Accepted Answer

A) $400 
B) $800 
C) $1,200 
D) $1,600 
A) $400 
B) $800 
C) $1,200 
D) $1,600

Question 7

With the effective interest method of amortization,the amortization of bond discount results in a(n)

Accepted Answer

A) increase in interest expense. 
B) decrease in stockholders' equity. 
C) increase in stockholders' equity. 
D) decrease in interest expense. 
A) increase in interest expense. 
B) decrease in stockholders' equity. 
C) increase in stockholders' equity. 
D) decrease in interest expense.

Question 8

Under the effective interest method of amortization,the interest expense for each period is the carrying value times the __________.

Accepted Answer

effective

Question 9

Bonds in the amount of $100,000 with a life of ten years were issued by Focus Company.If the face rate is 6% and interest is paid semiannually,what would be the total amount of interest paid over the life of the bonds?

Accepted Answer

A) $60,000 
B) $120,000 
C) $30,000 
D) $6,000 
A) $60,000 
B) $120,000 
C) $30,000 
D) $6,000

Question 10

Churchill Company planned to raise $100,000 by issuing bonds.The bond certificates were printed bearing an interest rate of 8%,which was equal to the market rate of interest at the time.However,before the bonds could be issued,economic conditions forced the market rate up to 9%.If the life of the bonds is six years and interest is paid annually on December 31,how much will Churchill receive from the sale of the bonds?

Accepted Answer

A) Churchill will receive exactly $100,000 because it would still pay interest at the face rate of 8%. 
B) Churchill will receive less than $100,000 because the market rate of interest at 9% was more than the face rate. 
C) Churchill will receive greater than $100,000 because the face rate of interest at 8% was less than the market rate. 
D) The bonds would not be sold at all;Churchill Company would have the certificates reprinted bearing the market rate of 9%. 
A) Churchill will receive exactly $100,000 because it would still pay interest at the face rate of 8%. 
B) Churchill will receive less than $100,000 because the market rate of interest at 9% was more than the face rate. 
C) Churchill will receive greater than $100,000 because the face rate of interest at 8% was less than the market rate. 
D) The bonds would not be sold at all;Churchill Company would have the certificates reprinted bearing the market rate of 9%.

Question 11

Which of the following trends can be unfavorable from the viewpoint of a bondholder?

Accepted Answer

A) The issuing company's debt ratio is steadily declining. 
B) The issuing company's interest coverage ratio is steadily rising. 
C) Market interest rates are steadily rising. 
D) The issuing company's net cash flow from operating activities is steadily increasing. 
A) The issuing company's debt ratio is steadily declining. 
B) The issuing company's interest coverage ratio is steadily rising. 
C) Market interest rates are steadily rising. 
D) The issuing company's net cash flow from operating activities is steadily increasing.

Question 12

Endeavor Company issued 20-year bonds with a coupon rate of 6% when the market rate of interest was 9%.This means that the bonds were issued

Accepted Answer

A) at a premium. 
B) at a discount. 
C) at the face value. 
D) with an additional three years of interest. 
A) at a premium. 
B) at a discount. 
C) at the face value. 
D) with an additional three years of interest.

Question 13

On the issuance date,the Bonds Payable account had a balance of $50,000,000 and Premium on Bonds Payable had a balance of $1,000,000.What was the issue price of the bonds in dollars?

Accepted Answer

A) $50,000,000 
B) $49,000,000 
C) $51,000,000 
D) Unable to determine from the information given 
A) $50,000,000 
B) $49,000,000 
C) $51,000,000 
D) Unable to determine from the information given

Question 14

Stockton Corporation has made an accounting entry to record deferred taxes as a liability resulting from temporary differences between accounting income and taxable income.Which of the following statements is true?

Accepted Answer

A) Deferred tax will be decreased. 
B) Stockholders' equity will be increased. 
C) Stockholders' equity will be decreased. 
D) Assets will be decreased. 
A) Deferred tax will be decreased. 
B) Stockholders' equity will be increased. 
C) Stockholders' equity will be decreased. 
D) Assets will be decreased.

Question 15

A(n)__________ lease is recorded on the lessee's balance sheet as an asset and related liability.

Accepted Answer

The answer of A(n)__________ lease is recorded on the lessee's...

Question 16

The denomination or principal amount of the bond is usually referred to as the __________.

Accepted Answer

face value

Question 17

Antietam Corporation

Use the note on disclosure of leases for Antietam Corporation to answer the questions that follow.

The Corporation leases office, warehouse and showroom space, retail stores and office equipment under operating leases, which expire no later than 2031. The Corporation normalizes fixed escalations in rental expense under its operating leases. Minimum annual rentals under noncancelable operating leases, excluding operating cost escalations and contingent rental amounts based upon retail sales, are payable as follows:$\begin{array}{l}
\text { Fiscal year ending March 31, }\
\begin{array} { l r } 
2017 & \$ 10,051,000 \
2018 & 11,121,000 \
2019 & 10,161,000 \
2020 & 9,063,000 \
2021 & 8,814,000 \
\text { Thereafter } & 46,681,000
\end{array}
\end{array}$Rent expense was $12,551,000, $8,911,000, and $5,768,000 for the years ended March 31, 2016, 2015, and 2014, respectively.

-Review the information for Antietam Corporation.
 
Required
Determine the effect on the accounting equation when recording each type of lease described in the previous question.

Accepted Answer

The entry for an operating lease merely

Question 18

Although operating leases are not recorded on the balance sheet by the lessee,they are disclosed in the __________.

Accepted Answer

notes to the financi

Question 19

A convertible bond is one where

Accepted Answer

A) the issuer can convert from a fixed interest rate to a floating one. 
B) the issuer can convert it from long-term to short-term. 
C) the issuer can retire the bond before its specified due date. 
D) the holder can convert the bond into common stock at a future time. 
A) the issuer can convert from a fixed interest rate to a floating one. 
B) the issuer can convert it from long-term to short-term. 
C) the issuer can retire the bond before its specified due date. 
D) the holder can convert the bond into common stock at a future time.

Question 20

When a company has a credit balance in its Deferred Tax account,this amount would appear as a(n)

Accepted Answer

A) contra asset on the balance sheet. 
B) stockholders' equity account on the balance sheet. 
C) expense account on the income statement. 
D) liability account on the balance sheet. 
A) contra asset on the balance sheet. 
B) stockholders' equity account on the balance sheet. 
C) expense account on the income statement. 
D) liability account on the balance sheet.

When a bond is retired early and the redemption price is greater than the bond's carrying value,there will be a(n)__________ on redemption.

All liabilities that are not classified as current liabilities are classified as __________.

Bonds are typically issued in denominations of $10,000.

How do most changes in long-term liabilities on the balance sheet appear on the cash flow statement?

On January 2,2017,Garage Master Construction,Inc.issued $500,000,ten-year bonds for $574,540.The bonds pay interest on June 30 and December 31.The face rate is 8% and the market rate is 6%.The interest expense on the bonds at June 30,2017,is

For 2017,Wasabi Company has accounting revenues of $6,000.However,because of temporary differences between tax and accounting,$1,000 of this is not subject to tax.If expenses are $3,000 for both tax and accounting,and the tax rate is 40%,what is the amount of tax payable to the IRS?

With the effective interest method of amortization,the amortization of bond discount results in a(n)

Under the effective interest method of amortization,the interest expense for each period is the carrying value times the __________.

Bonds in the amount of $100,000 with a life of ten years were issued by Focus Company.If the face rate is 6% and interest is paid semiannually,what would be the total amount of interest paid over the life of the bonds?

Which of the following trends can be unfavorable from the viewpoint of a bondholder?

Endeavor Company issued 20-year bonds with a coupon rate of 6% when the market rate of interest was 9%.This means that the bonds were issued

On the issuance date,the Bonds Payable account had a balance of $50,000,000 and Premium on Bonds Payable had a balance of $1,000,000.What was the issue price of the bonds in dollars?

Stockton Corporation has made an accounting entry to record deferred taxes as a liability resulting from temporary differences between accounting income and taxable income.Which of the following statements is true?

A(n)__________ lease is recorded on the lessee's balance sheet as an asset and related liability.

The denomination or principal amount of the bond is usually referred to as the __________.

Although operating leases are not recorded on the balance sheet by the lessee,they are disclosed in the __________.

A convertible bond is one where

When a company has a credit balance in its Deferred Tax account,this amount would appear as a(n)

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 10: Long-Term Liabilities

When a bond is retired early and the redemption price is greater than the bond's carrying value,there will be a(n)__________ on redemption.

All liabilities that are not classified as current liabilities are classified as __________.

Bonds are typically issued in denominations of $10,000.

How do most changes in long-term liabilities on the balance sheet appear on the cash flow statement?

On January 2,2017,Garage Master Construction,Inc.issued $500,000,ten-year bonds for $574,540.The bonds pay interest on June 30 and December 31.The face rate is 8% and the market rate is 6%.The interest expense on the bonds at June 30,2017,is

For 2017,Wasabi Company has accounting revenues of $6,000.However,because of temporary differences between tax and accounting,$1,000 of this is not subject to tax.If expenses are $3,000 for both tax and accounting,and the tax rate is 40%,what is the amount of tax payable to the IRS?

With the effective interest method of amortization,the amortization of bond discount results in a(n)

Under the effective interest method of amortization,the interest expense for each period is the carrying value times the __________.

Bonds in the amount of $100,000 with a life of ten years were issued by Focus Company.If the face rate is 6% and interest is paid semiannually,what would be the total amount of interest paid over the life of the bonds?

Which of the following trends can be unfavorable from the viewpoint of a bondholder?

Endeavor Company issued 20-year bonds with a coupon rate of 6% when the market rate of interest was 9%.This means that the bonds were issued

On the issuance date,the Bonds Payable account had a balance of $50,000,000 and Premium on Bonds Payable had a balance of $1,000,000.What was the issue price of the bonds in dollars?

Stockton Corporation has made an accounting entry to record deferred taxes as a liability resulting from temporary differences between accounting income and taxable income.Which of the following statements is true?

A(n)__________ lease is recorded on the lessee's balance sheet as an asset and related liability.

The denomination or principal amount of the bond is usually referred to as the __________.

Although operating leases are not recorded on the balance sheet by the lessee,they are disclosed in the __________.

A convertible bond is one where

When a company has a credit balance in its Deferred Tax account,this amount would appear as a(n)

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters