Question 1

The change in the Deferred Taxes account is reflected in the Operating Activities category of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 2

Rent owed to the landlord is a balance sheet item for Generic Products Company.How would it most likely be classified on the balance sheet?

Accepted Answer

A) Current liability 
B) Long-term liability 
C) Current asset 
D) Owners' equity 
A) Current liability 
B) Long-term liability 
C) Current asset 
D) Owners' equity

Question 3

The asset leased under an operating lease requires the lessee to record depreciation expense.

Accepted Answer

A) True 
 B)False

Question 4

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%.What is the carrying value of the bonds at the end of the ten years?

Accepted Answer

A) $400,000 
B) $480,000 
C) $380,000 
D) $354,200 
A) $400,000 
B) $480,000 
C) $380,000 
D) $354,200

Question 5

All of the following statements are true except

Accepted Answer

A) the criteria to determine whether a lease contract should be considered a capital lease are applied in a more rigid way under U.S.GAAP than IFRS. 
B) the criteria to determine whether a lease contract should be considered a capital lease are applied in a more rigid way under IFRS than U.S.GAAP. 
C) the lease criteria under IFRS are to be used as guidelines rather than rules. 
D) IFRS require more accounting judgment than U.S.GAAP in the determination of whether a lease is classified as an operating lease or a capital lease. 
A) the criteria to determine whether a lease contract should be considered a capital lease are applied in a more rigid way under U.S.GAAP than IFRS. 
B) the criteria to determine whether a lease contract should be considered a capital lease are applied in a more rigid way under IFRS than U.S.GAAP. 
C) the lease criteria under IFRS are to be used as guidelines rather than rules. 
D) IFRS require more accounting judgment than U.S.GAAP in the determination of whether a lease is classified as an operating lease or a capital lease.

Question 6

With the effective interest method of amortization,the amortization of a bond premium results in

Accepted Answer

A) an increase in stockholders' equity. 
B) no change in stockholders' equity. 
C) an increase in interest expense. 
D) a decrease in interest expense. 
A) an increase in stockholders' equity. 
B) no change in stockholders' equity. 
C) an increase in interest expense. 
D) a decrease in interest expense.

Question 7

On January 2,2017,Lawn 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%.What is the carrying value of the bonds at the end of ten years before the final maturity payment is made?

Accepted Answer

A) $574,540 
B) $525,000 
C) $500,000 
D) $425,460 
A) $574,540 
B) $525,000 
C) $500,000 
D) $425,460

Question 8

Which of the following statements regarding bonds payable is true?

Accepted Answer

A) Generally,bonds are issued in denominations of $100. 
B) When an issuing company's bonds are traded in the "secondary" market,the company will receive part of the proceeds when the bonds are sold from the first purchaser to the second purchaser. 
C) A debenture bond is backed by specific assets of the issuing company. 
D) Most bonds are term bonds,meaning that the entire principal amount will mature on a single date. 
A) Generally,bonds are issued in denominations of $100. 
B) When an issuing company's bonds are traded in the "secondary" market,the company will receive part of the proceeds when the bonds are sold from the first purchaser to the second purchaser. 
C) A debenture bond is backed by specific assets of the issuing company. 
D) Most bonds are term bonds,meaning that the entire principal amount will mature on a single date.

Question 9

On January 1,2017,the Long-Term Liability section of Quick Silver Co.'s balance sheet showed a balance of $800,000 in the Bonds Payable account.On December 31,2017,the balance in that same account was $765,000.This change would appear on the statement of cash flows as an

Accepted Answer

A) outflow of cash of $35,000 in the Financing Activities category. 
B) inflow of cash of $35,000 in the Financing Activities category. 
C) outflow of cash of $35,000 in the Investing Activities category. 
D) inflow of cash of $35,000 in the Investing Activities category. 
A) outflow of cash of $35,000 in the Financing Activities category. 
B) inflow of cash of $35,000 in the Financing Activities category. 
C) outflow of cash of $35,000 in the Investing Activities category. 
D) inflow of cash of $35,000 in the Investing Activities category.

Question 10

Wave Corporation is determining its income tax liability.It has one machine that cost $30,000 with a four-year life and no salvage value.Wave is using an accelerated depreciation method for tax purposes.For accounting purposes,Wave has decided to use the straight-line method.Which of the following statements is true?

Accepted Answer

A) There will be a temporary difference between accounting income and income for tax purposes. 
B) There will be a permanent difference between accounting income and income for tax purposes. 
C) Wave's accounting income and income for tax purposes will be equal. 
D) Accounting income will be lower than income for tax purposes,especially in the early years of the asset's life. 
A) There will be a temporary difference between accounting income and income for tax purposes. 
B) There will be a permanent difference between accounting income and income for tax purposes. 
C) Wave's accounting income and income for tax purposes will be equal. 
D) Accounting income will be lower than income for tax purposes,especially in the early years of the asset's life.

Question 11

The bond issue price is determined by calculating the

Accepted Answer

A) present value of the stream of interest payments and the future value of the maturity amount. 
B) future value of the stream of interest payments and the future value of the maturity amount. 
C) future value of the stream of interest payments and the present value of the maturity amount. 
D) present value of the stream of interest payments and the present value of the maturity amount. 
A) present value of the stream of interest payments and the future value of the maturity amount. 
B) future value of the stream of interest payments and the future value of the maturity amount. 
C) future value of the stream of interest payments and the present value of the maturity amount. 
D) present value of the stream of interest payments and the present value of the maturity amount.

Question 12

East Liberty Corp.received authorization on December 31,2017,to issue $7,000,000 face value of 6%,ten-year bonds.The interest payment dates are June 30 and December 31.All the bonds were issued at par,plus accrued interest,April 1,2018.The bonds are callable by East Liberty at any time at 102.
?
Required
East Liberty exercises the call provision and retires one-half of the bond issue on July,1,2020.Determine the impact on the accounting equation of the journal entry to record this transaction on July 1,2020.

Accepted Answer

?
 2020
To record re

Question 13

The result of using the effective interest method of amortization of discount on bonds is that the

Accepted Answer

A) interest expense for each amortization period is constant. 
B) effective interest rate for each amortization period is constant. 
C) amount of interest expense decreases each period. 
D) cash interest payment is greater than the interest expense. 
A) interest expense for each amortization period is constant. 
B) effective interest rate for each amortization period is constant. 
C) amount of interest expense decreases each period. 
D) cash interest payment is greater than the interest expense.

Question 14

A friend of yours has asked you whether off-balance-sheet financing means that the amounts are immaterial and therefore are not reported.In a short paragraph,tell him what off-balance-sheet financing is and why firms engage in off-balance-sheet transactions.

Accepted Answer

Off-balance-sheet financing refers to tr

Question 15

A company issued ten-year bonds with a par value of $20,000,000 and an 8% annual face on January 2,2017.The issue price of the bond issue was $19,866,397 which reflected an 8.1% effective interest rate.
Required
 a) Determine the effect on the accounting equation up on recording the issuance of the bonds.

b) Determine the effect on the accounting equation up on recording the recognition of interest expense at December 31,2017. Any premium or discount should be amortized using the effective interest rate method.

c) Determine the effect on the accounting equation up on recording the interest paid to the bondholders on January 2, 2018.

d) Determine the effect on the accounting equation up on recognizing the interest expense at December 31,2018. Any premium or discount should be amortized using the effective interest rate method.

Accepted Answer

a.
?
 @#IMG-DLM& b.
?
 @#IMG-DLM& ($19,866,397 × 0

Question 16

Callable bonds may be retired by the issuer before their specified due date.

Accepted Answer

A) True 
 B)False

Question 17

Temporary differences occur when an item affects both book and tax calculations but not in the same time period.

Accepted Answer

A) True 
 B)False

Question 18

Discount on Bonds Payable is shown on the balance sheet as a(n)__________.

Accepted Answer

The answer of Discount on Bonds Payable is shown on...

Question 19

Weather Corp.issued ten-year,8%,$100,000 bonds paying interest on an annual basis,at a $5,200 premium.Which one of the following statements is true?

Accepted Answer

A) Weather's annual interest expense on the bonds will be greater than the amount of interest payments to bondholders each year. 
B) Weather's annual interest expense on the bonds will be less than the amount of interest payments to bondholders each year. 
C) Weather will receive $94,800 as the issue price. 
D) The cash paid to bondholders will be $520 each interest period. 
A) Weather's annual interest expense on the bonds will be greater than the amount of interest payments to bondholders each year. 
B) Weather's annual interest expense on the bonds will be less than the amount of interest payments to bondholders each year. 
C) Weather will receive $94,800 as the issue price. 
D) The cash paid to bondholders will be $520 each interest period.

Question 20

All changes in long-term liabilities are reflected in the Financing Activities category of the statement of cash flows.

Accepted Answer

A) True 
 B)False

The change in the Deferred Taxes account is reflected in the Operating Activities category of the statement of cash flows.

Rent owed to the landlord is a balance sheet item for Generic Products Company.How would it most likely be classified on the balance sheet?

The asset leased under an operating lease requires the lessee to record depreciation expense.

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%.What is the carrying value of the bonds at the end of the ten years?

All of the following statements are true except

With the effective interest method of amortization,the amortization of a bond premium results in

On January 2,2017,Lawn 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%.What is the carrying value of the bonds at the end of ten years before the final maturity payment is made?

Which of the following statements regarding bonds payable is true?

On January 1,2017,the Long-Term Liability section of Quick Silver Co.'s balance sheet showed a balance of $800,000 in the Bonds Payable account.On December 31,2017,the balance in that same account was $765,000.This change would appear on the statement of cash flows as an

The bond issue price is determined by calculating the

The result of using the effective interest method of amortization of discount on bonds is that the

A friend of yours has asked you whether off-balance-sheet financing means that the amounts are immaterial and therefore are not reported.In a short paragraph,tell him what off-balance-sheet financing is and why firms engage in off-balance-sheet transactions.

Callable bonds may be retired by the issuer before their specified due date.

Temporary differences occur when an item affects both book and tax calculations but not in the same time period.

Discount on Bonds Payable is shown on the balance sheet as a(n)__________.

Weather Corp.issued ten-year,8%,$100,000 bonds paying interest on an annual basis,at a $5,200 premium.Which one of the following statements is true?

All changes in long-term liabilities are reflected in the Financing Activities category of the statement of cash flows.

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

The change in the Deferred Taxes account is reflected in the Operating Activities category of the statement of cash flows.

Rent owed to the landlord is a balance sheet item for Generic Products Company.How would it most likely be classified on the balance sheet?

The asset leased under an operating lease requires the lessee to record depreciation expense.

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%.What is the carrying value of the bonds at the end of the ten years?

All of the following statements are true except

With the effective interest method of amortization,the amortization of a bond premium results in

On January 2,2017,Lawn 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%.What is the carrying value of the bonds at the end of ten years before the final maturity payment is made?

Which of the following statements regarding bonds payable is true?

On January 1,2017,the Long-Term Liability section of Quick Silver Co.'s balance sheet showed a balance of $800,000 in the Bonds Payable account.On December 31,2017,the balance in that same account was $765,000.This change would appear on the statement of cash flows as an

The bond issue price is determined by calculating the

The result of using the effective interest method of amortization of discount on bonds is that the

A friend of yours has asked you whether off-balance-sheet financing means that the amounts are immaterial and therefore are not reported.In a short paragraph,tell him what off-balance-sheet financing is and why firms engage in off-balance-sheet transactions.

Callable bonds may be retired by the issuer before their specified due date.

Temporary differences occur when an item affects both book and tax calculations but not in the same time period.

Discount on Bonds Payable is shown on the balance sheet as a(n)__________.

Weather Corp.issued ten-year,8%,$100,000 bonds paying interest on an annual basis,at a $5,200 premium.Which one of the following statements is true?

All changes in long-term liabilities are reflected in the Financing Activities category of the statement of cash flows.

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