Question 1

Which of the following statements is true with respect to long-term liabilities?

Accepted Answer

A) They are obligations that will be satisfied within one year. 
B) An account payable is a good example of a long-term liability because it is interest-bearing. 
C) Long-term liabilities include bonds,other long-term liabilities and deferred income taxes. 
D) Accrued expenses are considered to be long-term liabilities. 
A) They are obligations that will be satisfied within one year. 
B) An account payable is a good example of a long-term liability because it is interest-bearing. 
C) Long-term liabilities include bonds,other long-term liabilities and deferred income taxes. 
D) Accrued expenses are considered to be long-term liabilities.

Question 2

An example of a cash flow related to a liability that would not appear in the financing activities category of the statement of cash flows is

Accepted Answer

A) mortgage payable. 
B) bonds payable. 
C) deferred income taxes. 
D) a lease obligation. 
A) mortgage payable. 
B) bonds payable. 
C) deferred income taxes. 
D) a lease obligation.

Question 3

The Premium on Bonds Payable account is shown on the balance sheet as

Accepted Answer

A) a contra asset. 
B) a reduction of an expense. 
C) an addition to a long-term liability. 
D) a subtraction from a long-term liability. 
A) a contra asset. 
B) a reduction of an expense. 
C) an addition to a long-term liability. 
D) a subtraction from a long-term liability.

Question 4

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 3 years of interest. 
A) at a premium. 
B) at a discount. 
C) at the face value. 
D) with an additional 3 years of interest.

Question 5

Grenada Corporation
Use the note on Disclosure of Leases for the Grenada 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 2025.The Corporation normalizes fixed escalations in rental expense under its operating leases.Minimum annual rentals under non-cancelable operating leases,excluding operating cost escalations and contingent rental amounts based upon retail sales,are payable as follows:
Fiscal year ending March 31,
   Rent expense was $12,551,000;$8,911,000;and $5,768,000 for the years ended March 31,2010,2009,and 2008 respectively.
Review the information for Grenada Corporation.
REQUIRED:
The note disclosure mentions contingent rent payments.What do you think this means with regard to Grenada Corporation?

Accepted Answer

The implication is that under certain ci

Question 6

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

Question 7

[APPENDIX] The deferred income taxes for a corporation represent

Accepted Answer

A) the dollar amount of deductions that a corporation may claim for the year. 
B) an additional assessment made by the IRS for underpaid taxes. 
C) the estimated amount of next year's taxes. 
D) the dollar amount that arises due to the difference between accounting for financial statements and accounting for tax purposes. 
A) the dollar amount of deductions that a corporation may claim for the year. 
B) an additional assessment made by the IRS for underpaid taxes. 
C) the estimated amount of next year's taxes. 
D) the dollar amount that arises due to the difference between accounting for financial statements and accounting for tax purposes.

Question 8

Grenada Corporation
Use the note on Disclosure of Leases for the Grenada 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 2025.The Corporation normalizes fixed escalations in rental expense under its operating leases.Minimum annual rentals under non-cancelable operating leases,excluding operating cost escalations and contingent rental amounts based upon retail sales,are payable as follows:
Fiscal year ending March 31,
   Rent expense was $12,551,000;$8,911,000;and $5,768,000 for the years ended March 31,2010,2009,and 2008 respectively.
Review the information for Grenada 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 9

On January 1,2012,Breaker,Inc.issued $400,000,10-year,10% bonds for $354,200.The bonds pay interest on June 30 and December 31.The market rate is 12%.The interest expense on the bonds at June 30,2013 is

Accepted Answer

A) $20,000 
B) $24,000 
C) $21,252 
D) $17,710 
A) $20,000 
B) $24,000 
C) $21,252 
D) $17,710

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

[APPENDIX] Deferred income taxes is a balance sheet item for Generic Products Company.How would it most likely be classified on the balance sheet?

Accepted Answer

A) Owners' equity 
B) Long-term liability 
C) Expense 
D) Contra liability 
A) Owners' equity 
B) Long-term liability 
C) Expense 
D) Contra liability

Question 12

If the lease term is 75% or more of the property's economic life,the lease agreement should be accounted for as an operating lease.

Accepted Answer

A) True 
 B)False

Question 13

On January 2,2012,Dock Master Construction,Inc.issued $500,000,10-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%.At the maturity date,besides an interest payment,Dock Master would repay the bondholders

Accepted Answer

A) $574,540. 
B) $520,000. 
C) $500,000. 
D) only the last interest payment. 
A) $574,540. 
B) $520,000. 
C) $500,000. 
D) only the last interest payment.

Question 14

Serial bonds are unique because the interest is paid as a series of daily payments.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 17

[APPENDIX] 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

In calculating deferred income taxes,___________________________________ occur when an item is included in the tax calculation and is never included for financial accounting purposes,or vice versa.

Accepted Answer

permanent

Question 19

Use the information provided in the time value of money tables (Tables 9-1 through 9-4)in the text to answer the question that follows. Cosmic Company issued $1,000,000,8%,7 year bonds,interest payable semiannually.The market rate of interest was 6%.The issuance price of the bonds is

Accepted Answer

A) $1,111,560 
B) $1,000,000 
C) $1,151,480 
D) $1,112,840 
A) $1,111,560 
B) $1,000,000 
C) $1,151,480 
D) $1,112,840

Question 20

If a company becomes less creditworthy,the market price of its bonds will decline.

Accepted Answer

A) True 
 B)False

Which of the following statements is true with respect to long-term liabilities?

An example of a cash flow related to a liability that would not appear in the financing activities category of the statement of cash flows is

The Premium on Bonds Payable account is shown on the balance sheet as

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

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

[APPENDIX] The deferred income taxes for a corporation represent

On January 1,2012,Breaker,Inc.issued $400,000,10-year,10% bonds for $354,200.The bonds pay interest on June 30 and December 31.The market rate is 12%.The interest expense on the bonds at June 30,2013 is

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

[APPENDIX] Deferred income taxes is a balance sheet item for Generic Products Company.How would it most likely be classified on the balance sheet?

If the lease term is 75% or more of the property's economic life,the lease agreement should be accounted for as an operating lease.

On January 2,2012,Dock Master Construction,Inc.issued $500,000,10-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%.At the maturity date,besides an interest payment,Dock Master would repay the bondholders

Serial bonds are unique because the interest is paid as a series of daily payments.

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

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

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

In calculating deferred income taxes,___________________________________ occur when an item is included in the tax calculation and is never included for financial accounting purposes,or vice versa.

Use the information provided in the time value of money tables (Tables 9-1 through 9-4)in the text to answer the question that follows. Cosmic Company issued $1,000,000,8%,7 year bonds,interest payable semiannually.The market rate of interest was 6%.The issuance price of the bonds is

If a company becomes less creditworthy,the market price of its bonds will decline.

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

Which of the following statements is true with respect to long-term liabilities?

An example of a cash flow related to a liability that would not appear in the financing activities category of the statement of cash flows is

The Premium on Bonds Payable account is shown on the balance sheet as

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

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

[APPENDIX] The deferred income taxes for a corporation represent

On January 1,2012,Breaker,Inc.issued $400,000,10-year,10% bonds for $354,200.The bonds pay interest on June 30 and December 31.The market rate is 12%.The interest expense on the bonds at June 30,2013 is

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

[APPENDIX] Deferred income taxes is a balance sheet item for Generic Products Company.How would it most likely be classified on the balance sheet?

If the lease term is 75% or more of the property's economic life,the lease agreement should be accounted for as an operating lease.

On January 2,2012,Dock Master Construction,Inc.issued $500,000,10-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%.At the maturity date,besides an interest payment,Dock Master would repay the bondholders

Serial bonds are unique because the interest is paid as a series of daily payments.

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

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

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

In calculating deferred income taxes,___________________________________ occur when an item is included in the tax calculation and is never included for financial accounting purposes,or vice versa.

Use the information provided in the time value of money tables (Tables 9-1 through 9-4)in the text to answer the question that follows. Cosmic Company issued $1,000,000,8%,7 year bonds,interest payable semiannually.The market rate of interest was 6%.The issuance price of the bonds is

If a company becomes less creditworthy,the market price of its bonds will decline.

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