Question 1

Bonds are sold at face value when the contract rate is equal to the market rate of interest.

Accepted Answer

A) True 
 B)False  True

Question 2

A bond indenture is

Accepted Answer

A) a contract between the corporation issuing the bonds and the underwriters selling the bonds. 
B) the amount due at the maturity date of the bonds. 
C) a contract between the corporation issuing the bonds and the bondholders. 
D) the amount for which the corporation can buy back the bonds prior to the maturity date. 
A) a contract between the corporation issuing the bonds and the underwriters selling the bonds. 
B) the amount due at the maturity date of the bonds. 
C) a contract between the corporation issuing the bonds and the bondholders. 
D) the amount for which the corporation can buy back the bonds prior to the maturity date. C

Question 3

If the market rate of interest is greater than the contractual rate of interest,bonds will sell

Accepted Answer

A) at a premium. 
B) at face value. 
C) at a discount. 
D) only after the stated rate of interest is increased. 
A) at a premium. 
B) at face value. 
C) at a discount. 
D) only after the stated rate of interest is increased. C

Question 4

For accounting purposes,stated value is treated the same way as par value.

Accepted Answer

A) True 
 B)False

Question 5

The issuance of common stock affects both paid-in capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 6

Bonds payable due in 2020 are reported on the balance sheet as long-term liabilities.

Accepted Answer

A) True 
 B)False

Question 7

The declaration of a cash dividend decreases a corporation's stockholders' equity and decreases its assets.

Accepted Answer

A) True 
 B)False

Question 8

The declaration of a cash dividend decreases a corporation's stockholders' equity and increases its liabilities.

Accepted Answer

A) True 
 B)False

Question 9

For proper matching of revenues and expenses,the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

Accepted Answer

A) True 
 B)False

Question 10

The total earnings of an employee for a payroll period is referred to as gross pay.

Accepted Answer

A) True 
 B)False

Question 11

A corporation has 50,000 shares of $100 par value stock outstanding that has a current market value of $180.If the corporation issues a 4-for-1 stock split,the market value of the stock will fall to approximately

Accepted Answer

A) $30. 
B) $36. 
C) $45. 
D) $50. 
A) $30. 
B) $36. 
C) $45. 
D) $50.

Question 12

In which section of the balance sheet would treasury stock be reported?

Accepted Answer

A) Fixed assets 
B) Long-term liabilities 
C) Stockholders' equity 
D) Intangible assets 
A) Fixed assets 
B) Long-term liabilities 
C) Stockholders' equity 
D) Intangible assets

Question 13

Federal unemployment compensation tax becomes an employer's liability at the time the employee is paid.

Accepted Answer

A) True 
 B)False

Question 14

A corporation has 10,000 shares of $100 par value stock outstanding.If the corporation issues a 5-for-1 stock split,the number of shares outstanding after the split will be 2,000.

Accepted Answer

A) True 
 B)False

Question 15

Liabilities that are due and payable beyond one year or paid out of noncurrent assets are termed long-term liabilities.

Accepted Answer

A) True 
 B)False

Question 16

A bond is simply a form of an interest-bearing note.

Accepted Answer

A) True 
 B)False

Question 17

A 10% stock dividend will increase the number of shares outstanding and the book value per share.

Accepted Answer

A) True 
 B)False

Question 18

If the market rate of interest is 9% and a corporation's bonds bear interest at 7%,the bonds will sell at a premium.

Accepted Answer

A) True 
 B)False

Question 19

Indicate whether the following actions would (+)increase, (-)decrease,or (0)not affect
a company's total assets,liabilities,and stockholders' equity.

Accepted Answer

The answer of Indicate whether the following actions would (+)increase,...

Question 20

The market interest rate related to a bond is also called the

Accepted Answer

A) stated interest rate. 
B) effective interest rate. 
C) contract interest rate. 
D) straight-line rate. 
A) stated interest rate. 
B) effective interest rate. 
C) contract interest rate. 
D) straight-line rate.

Bonds are sold at face value when the contract rate is equal to the market rate of interest.

A bond indenture is

If the market rate of interest is greater than the contractual rate of interest,bonds will sell

For accounting purposes,stated value is treated the same way as par value.

The issuance of common stock affects both paid-in capital and retained earnings.

Bonds payable due in 2020 are reported on the balance sheet as long-term liabilities.

The declaration of a cash dividend decreases a corporation's stockholders' equity and decreases its assets.

The declaration of a cash dividend decreases a corporation's stockholders' equity and increases its liabilities.

For proper matching of revenues and expenses,the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

The total earnings of an employee for a payroll period is referred to as gross pay.

A corporation has 50,000 shares of $100 par value stock outstanding that has a current market value of $180.If the corporation issues a 4-for-1 stock split,the market value of the stock will fall to approximately

In which section of the balance sheet would treasury stock be reported?

Federal unemployment compensation tax becomes an employer's liability at the time the employee is paid.

A corporation has 10,000 shares of $100 par value stock outstanding.If the corporation issues a 5-for-1 stock split,the number of shares outstanding after the split will be 2,000.

Liabilities that are due and payable beyond one year or paid out of noncurrent assets are termed long-term liabilities.

A bond is simply a form of an interest-bearing note.

A 10% stock dividend will increase the number of shares outstanding and the book value per share.

If the market rate of interest is 9% and a corporation's bonds bear interest at 7%,the bonds will sell at a premium.

Indicate whether the following actions would (+)increase, (-)decrease,or (0)not affect a company's total assets,liabilities,and stockholders' equity.

The market interest rate related to a bond is also called the

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley,internal Control,and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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Exam 8: Liabilities and Stockholders Equity

Bonds are sold at face value when the contract rate is equal to the market rate of interest.

A bond indenture is

If the market rate of interest is greater than the contractual rate of interest,bonds will sell

For accounting purposes,stated value is treated the same way as par value.

The issuance of common stock affects both paid-in capital and retained earnings.

Bonds payable due in 2020 are reported on the balance sheet as long-term liabilities.

The declaration of a cash dividend decreases a corporation's stockholders' equity and decreases its assets.

The declaration of a cash dividend decreases a corporation's stockholders' equity and increases its liabilities.

For proper matching of revenues and expenses,the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

The total earnings of an employee for a payroll period is referred to as gross pay.

A corporation has 50,000 shares of $100 par value stock outstanding that has a current market value of $180.If the corporation issues a 4-for-1 stock split,the market value of the stock will fall to approximately

In which section of the balance sheet would treasury stock be reported?

Federal unemployment compensation tax becomes an employer's liability at the time the employee is paid.

A corporation has 10,000 shares of $100 par value stock outstanding.If the corporation issues a 5-for-1 stock split,the number of shares outstanding after the split will be 2,000.

Liabilities that are due and payable beyond one year or paid out of noncurrent assets are termed long-term liabilities.

A bond is simply a form of an interest-bearing note.

A 10% stock dividend will increase the number of shares outstanding and the book value per share.

If the market rate of interest is 9% and a corporation's bonds bear interest at 7%,the bonds will sell at a premium.

Indicate whether the following actions would (+)increase, (-)decrease,or (0)not affect a company's total assets,liabilities,and stockholders' equity.

The market interest rate related to a bond is also called the

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley,internal Control,and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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