Question 1

The present value of an annuity is the sum of the present values of each cash flow.

Accepted Answer

A) True 
 B)False

Question 2

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000.Journalize the redemption of the bonds.

Accepted Answer

The answer of A $500,000 bond issue on which there...

Question 3

Sinking Fund Cash would be classified on the balance sheet as

Accepted Answer

A) a current asset 
B) a fixed asset 
C) an intangible asset 
D) an investment 
A) a current asset 
B) a fixed asset 
C) an intangible asset 
D) an investment

Question 4

On January 1,2011,Zero Company obtained a $52,000,four-year,6.5% installment note from Regional Bank.The note requires annual payments consisting of principal and interest of $15,179,beginning on December 31,2011.The December 31,2011 carrying amount in the amortization table for this installment note will be equal to:

Accepted Answer

A) $27,635 
B) $40,201 
C) $36,821 
D) $48,620 
A) $27,635 
B) $40,201 
C) $36,821 
D) $48,620

Question 5

On January 1,2014,Gemstone Company obtained a $165,000,10-year,7% installment note from Guarantee Bank.The note requires annual payments of $23,492,with the first payment occurring on the last day of the fiscal year.The first payment consists of interest of $11,550 and principal repayment of $11,942.The journal entry to record the payment of the first annual amount due on the note would include:

Accepted Answer

A) a debit to cash of $11,942 
B) a credit to Interest Payable of $11,550 
C) a debit to Notes Payable of $11,942 
D) a debit to Interest Expense of $23,492 
A) a debit to cash of $11,942 
B) a credit to Interest Payable of $11,550 
C) a debit to Notes Payable of $11,942 
D) a debit to Interest Expense of $23,492

Question 6

Using the following table,what is the present value of $5,000 to be received 5 years,if the market rate is 10% compounded annually?

Accepted Answer

X = $5,000

Question 7

When a corporation issues bonds,it executes a contract with the bondholders,known as a bond debenture.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not an advantage of issuing bonds instead of common stock?

Accepted Answer

A) Tax savings result 
B) Income to common shareholders may increase. 
C) Earnings per share on common stock may be lower. 
D) Stockholder control is not affected. 
A) Tax savings result 
B) Income to common shareholders may increase. 
C) Earnings per share on common stock may be lower. 
D) Stockholder control is not affected.

Question 9

The higher the times interest earned ratio,the better the creditors' protection.

Accepted Answer

A) True 
 B)False

Question 10

The market rate of interest is affected by a variety of factors,including investors' assessment of current economic conditions.

Accepted Answer

A) True 
 B)False

Question 11

Premium on bonds payable may be amortized by the straight-line method if the results obtained by its use do not materially differ from the results obtained by use of the interest method.

Accepted Answer

A) True 
 B)False

Question 12

When the market rate of interest was 12%,Halprin Corporation issued $1,000,000,11%,10-year bonds that pay interest annually.The selling price of this bond issue was

Accepted Answer

A) $ 321,970 
B) $1,000,000 
C) $ 943,494 
D) $621,524 
A) $ 321,970 
B) $1,000,000 
C) $ 943,494 
D) $621,524

Question 13

The Miracle Corporation issues 1,000,10-year,8%,$1,000 bonds dated January 1,2011,at 96.The journal entry to record the issuance will show a

Accepted Answer

A) debit to Discount on Bonds Payable for $40,000. 
B) debit to Cash of $1,000,000. 
C) credit to Bonds Payable for $960,000. 
D) credit to Cash for $960,000. 
A) debit to Discount on Bonds Payable for $40,000. 
B) debit to Cash of $1,000,000. 
C) credit to Bonds Payable for $960,000. 
D) credit to Cash for $960,000.

Question 14

When the market rate of interest was 11%,Munson Corporation issued $1,000,000,12%,8-year bonds that pay interest semiannually.The selling price of this bond issue was

Accepted Answer

A) $1,052,310 
B) $1,154,387 
C) $1,000,000 
D) $ 720,495 
A) $1,052,310 
B) $1,154,387 
C) $1,000,000 
D) $ 720,495

Question 15

One potential advantage of financing corporations through the use of bonds rather than common stock is

Accepted Answer

A) the interest on bonds must be paid when due 
B) the corporation must pay the bonds at maturity 
C) the interest expense is deductible for tax purposes by the corporation 
D) a higher earnings per share is guaranteed for existing common shareholders 
A) the interest on bonds must be paid when due 
B) the corporation must pay the bonds at maturity 
C) the interest expense is deductible for tax purposes by the corporation 
D) a higher earnings per share is guaranteed for existing common shareholders

Question 16

If bonds payable are not callable,the issuing corporation

Accepted Answer

A) can exchange it for common stock 
B) can repurchase them in the open market 
C) must get special permission from the SEC to repurchase them 
D) is more likely to repurchase them if the interest rates increase 
A) can exchange it for common stock 
B) can repurchase them in the open market 
C) must get special permission from the SEC to repurchase them 
D) is more likely to repurchase them if the interest rates increase

Question 17

If $1,000,000 of 8% bonds are issued at 105,the amount of cash received from the sale is

Accepted Answer

A) $1,080,000 
B) $950,000 
C) $1,000,000 
D) $1,050,000 
A) $1,080,000 
B) $950,000 
C) $1,000,000 
D) $1,050,000

Question 18

The present value of $5,000 to be received in 4 years at a market rate of interest of 6% compounded annually is $3,636.30.

Accepted Answer

A) True 
 B)False

Question 19

The face value of a term bond is payable at a single specific date in the future.

Accepted Answer

A) True 
 B)False

Question 20

Bondholders are creditors of the issuing corporation.

Accepted Answer

A) True 
 B)False

The present value of an annuity is the sum of the present values of each cash flow.

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000.Journalize the redemption of the bonds.

Sinking Fund Cash would be classified on the balance sheet as

Using the following table,what is the present value of $5,000 to be received 5 years,if the market rate is 10% compounded annually?

When a corporation issues bonds,it executes a contract with the bondholders,known as a bond debenture.

Which of the following is not an advantage of issuing bonds instead of common stock?

The higher the times interest earned ratio,the better the creditors' protection.

The market rate of interest is affected by a variety of factors,including investors' assessment of current economic conditions.

Premium on bonds payable may be amortized by the straight-line method if the results obtained by its use do not materially differ from the results obtained by use of the interest method.

When the market rate of interest was 12%,Halprin Corporation issued $1,000,000,11%,10-year bonds that pay interest annually.The selling price of this bond issue was

The Miracle Corporation issues 1,000,10-year,8%,$1,000 bonds dated January 1,2011,at 96.The journal entry to record the issuance will show a

When the market rate of interest was 11%,Munson Corporation issued $1,000,000,12%,8-year bonds that pay interest semiannually.The selling price of this bond issue was

One potential advantage of financing corporations through the use of bonds rather than common stock is

If bonds payable are not callable,the issuing corporation

If $1,000,000 of 8% bonds are issued at 105,the amount of cash received from the sale is

The present value of $5,000 to be received in 4 years at a market rate of interest of 6% compounded annually is $3,636.30.

The face value of a term bond is payable at a single specific date in the future.

Bondholders are creditors of the issuing corporation.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, stock Transactions, and Dividends

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

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Exam 12: Long-Term Liabilities: Bonds and Notes

The present value of an annuity is the sum of the present values of each cash flow.

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000.Journalize the redemption of the bonds.

Sinking Fund Cash would be classified on the balance sheet as

Using the following table,what is the present value of $5,000 to be received 5 years,if the market rate is 10% compounded annually?

When a corporation issues bonds,it executes a contract with the bondholders,known as a bond debenture.

Which of the following is not an advantage of issuing bonds instead of common stock?

The higher the times interest earned ratio,the better the creditors' protection.

The market rate of interest is affected by a variety of factors,including investors' assessment of current economic conditions.

Premium on bonds payable may be amortized by the straight-line method if the results obtained by its use do not materially differ from the results obtained by use of the interest method.

When the market rate of interest was 12%,Halprin Corporation issued $1,000,000,11%,10-year bonds that pay interest annually.The selling price of this bond issue was

The Miracle Corporation issues 1,000,10-year,8%,$1,000 bonds dated January 1,2011,at 96.The journal entry to record the issuance will show a

When the market rate of interest was 11%,Munson Corporation issued $1,000,000,12%,8-year bonds that pay interest semiannually.The selling price of this bond issue was

One potential advantage of financing corporations through the use of bonds rather than common stock is

If bonds payable are not callable,the issuing corporation

If $1,000,000 of 8% bonds are issued at 105,the amount of cash received from the sale is

The present value of $5,000 to be received in 4 years at a market rate of interest of 6% compounded annually is $3,636.30.

The face value of a term bond is payable at a single specific date in the future.

Bondholders are creditors of the issuing corporation.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, stock Transactions, and Dividends

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters