Question 1

______________________ is the process of transferring an amount from the bond discount or premium to interest expense each time period to adjust interest expense.

Accepted Answer

The answer of ______________________ is the process of transferring an...

Question 2

[APPENDIX] Marshland Company uses the straight-line depreciation for financial reporting purposes and an accelerated depreciation method for tax purposes.As a result,Marshland will record:

Accepted Answer

A) a deferred tax asset. 
B) a deferred tax liability. 
C) a permanent difference. 
D) tax-exempt depreciation. 
A) a deferred tax asset. 
B) a deferred tax liability. 
C) a permanent difference. 
D) tax-exempt depreciation.

Question 3

On January 1,2012,the long-term liability section of Eden Company's balance sheet showed a balance of $35,000 in the bonds payable account.On December 31,2012,the balance in that same account was $20,000.This change would appear on the statement of cash flows as

Accepted Answer

A) an outflow of cash of $15,000 in the financing activities category. 
B) an inflow of cash of $15,000 in the financing activities category. 
C) an outflow of cash of $15,000 in the investing activities category. 
D) an inflow of cash of $15,000 in the investing activities category. 
A) an outflow of cash of $15,000 in the financing activities category. 
B) an inflow of cash of $15,000 in the financing activities category. 
C) an outflow of cash of $15,000 in the investing activities category. 
D) an inflow of cash of $15,000 in the investing activities category.

Question 4

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 5

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%.What is the carryingvalue 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 6

One of your friends is majoring in Aeronautics.In this industry,leases are very important and he is interested in knowing a little bit about how international accounting standards will affect the industry as compared to current U.S.GAAP treatments for leasing.How would you explain the differences in their applications?

Accepted Answer

Under U.S.GAAP,the criteria to determine

Question 7

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

Accepted Answer

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

Question 8

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 9

A ten-year lease obligation appears on the balance sheet of Generic Products Company.How would it most likely be classified on the balance sheet?

Accepted Answer

A) Current asset 
B) Long-term liability 
C) Long-term asset 
D) Contra-liability 
A) Current asset 
B) Long-term liability 
C) Long-term asset 
D) Contra-liability

Question 10

For a capital lease,the lessee must record both an asset and a liability.The amount of the asset is subsequently reduced by the process of __________________________.

Accepted Answer

depreciati

Question 11

Neville Company issued $100,000 of 6%,10 year bonds when the market rate of interest was 5%.The proceeds from this bond issue were $107,732.Using the effective interest method of amortization,which of the following statements is true? Assume interest is paid annually.

Accepted Answer

A) Interest payments to bondholders each period will be $6,464. 
B) Interest payments to bondholders each period will be $5,000. 
C) Amortization of the premium for the first interest period will be $1,226. 
D) Amortization of the premium for the first interest period will be $613. 
A) Interest payments to bondholders each period will be $6,464. 
B) Interest payments to bondholders each period will be $5,000. 
C) Amortization of the premium for the first interest period will be $1,226. 
D) Amortization of the premium for the first interest period will be $613.

Question 12

Which of the following statements regarding serial bonds is true?

Accepted Answer

A) They are likely to be issued by food companies. 
B) They have shorter lives than term bonds. 
C) They are strongly backed by the issuer's collateral. 
D) The bonds do not all mature on the same date. 
A) They are likely to be issued by food companies. 
B) They have shorter lives than term bonds. 
C) They are strongly backed by the issuer's collateral. 
D) The bonds do not all mature on the same date.

Question 13

Bonds are generally issued in denominations of $1,000.

Accepted Answer

A) True 
 B)False

Question 14

Amortization of bond premium results in a(n)

Accepted Answer

A) decrease of the carrying value of bonds. 
B) decrease of stockholders' equity. 
C) increase in interest expense. 
D) decrease in the cash account. 
A) decrease of the carrying value of bonds. 
B) decrease of stockholders' equity. 
C) increase in interest expense. 
D) decrease in the cash account.

Question 15

An investor views a high debt-to-equity ratio and a low times interest earned as a favorable sign of a company's abilities to meet its long-term obligations.

Accepted Answer

A) True 
 B)False

Question 16

When a bond is issued at a discount,the interest expense each year is less than the cash payment for interest.

Accepted Answer

A) True 
 B)False

Question 17

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?

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 18

[APPENDIX] A permanent difference with respect to taxes is a difference that affects
the tax records but not the accounting records,or vice versa.

Accepted Answer

A) True 
 B)False

Question 19

All of the following refer to the face rate of interest on a bond except:

Accepted Answer

A) stated rate 
B) effective rate 
C) nominal rate 
D) coupon rate 
A) stated rate 
B) effective rate 
C) nominal rate 
D) coupon rate

Question 20

Which of the following statements about bond accounting under the effective interest method is correct?

Accepted Answer

A) The cash interest paid is calculated as the bond face value ´ the effective rate. 
B) The interest expense is calculated as the carrying value ´ the effective rate. 
C) The difference between the cash interest paid and the interest expense is added to the carrying value of the bonds if bonds were sold at a premium. 
D) The difference between the interest expense and the interest paid is deducted from the carrying value of the bonds if bonds were sold at a discount. 
A) The cash interest paid is calculated as the bond face value ´ the effective rate. 
B) The interest expense is calculated as the carrying value ´ the effective rate. 
C) The difference between the cash interest paid and the interest expense is added to the carrying value of the bonds if bonds were sold at a premium. 
D) The difference between the interest expense and the interest paid is deducted from the carrying value of the bonds if bonds were sold at a discount.

______________________ is the process of transferring an amount from the bond discount or premium to interest expense each time period to adjust interest expense.

[APPENDIX] Marshland Company uses the straight-line depreciation for financial reporting purposes and an accelerated depreciation method for tax purposes.As a result,Marshland will record:

On January 1,2012,the long-term liability section of Eden Company's balance sheet showed a balance of $35,000 in the bonds payable account.On December 31,2012,the balance in that same account was $20,000.This change would appear on the statement of cash flows as

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

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%.What is the carryingvalue of the bonds at the end of ten years before the final maturity payment is made?

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

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.

A ten-year lease obligation appears on the balance sheet of Generic Products Company.How would it most likely be classified on the balance sheet?

For a capital lease,the lessee must record both an asset and a liability.The amount of the asset is subsequently reduced by the process of __________________________.

Neville Company issued $100,000 of 6%,10 year bonds when the market rate of interest was 5%.The proceeds from this bond issue were $107,732.Using the effective interest method of amortization,which of the following statements is true? Assume interest is paid annually.

Which of the following statements regarding serial bonds is true?

Bonds are generally issued in denominations of $1,000.

Amortization of bond premium results in a(n)

An investor views a high debt-to-equity ratio and a low times interest earned as a favorable sign of a company's abilities to meet its long-term obligations.

When a bond is issued at a discount,the interest expense each year is less than the cash payment for interest.

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?

[APPENDIX] A permanent difference with respect to taxes is a difference that affects the tax records but not the accounting records,or vice versa.

All of the following refer to the face rate of interest on a bond except:

Which of the following statements about bond accounting under the effective interest method is correct?

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

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Exam 10: Long-Term Liabilities

______________________ is the process of transferring an amount from the bond discount or premium to interest expense each time period to adjust interest expense.

[APPENDIX] Marshland Company uses the straight-line depreciation for financial reporting purposes and an accelerated depreciation method for tax purposes.As a result,Marshland will record:

On January 1,2012,the long-term liability section of Eden Company's balance sheet showed a balance of $35,000 in the bonds payable account.On December 31,2012,the balance in that same account was $20,000.This change would appear on the statement of cash flows as

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

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%.What is the carryingvalue of the bonds at the end of ten years before the final maturity payment is made?

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

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.

A ten-year lease obligation appears on the balance sheet of Generic Products Company.How would it most likely be classified on the balance sheet?

For a capital lease,the lessee must record both an asset and a liability.The amount of the asset is subsequently reduced by the process of __________________________.

Neville Company issued $100,000 of 6%,10 year bonds when the market rate of interest was 5%.The proceeds from this bond issue were $107,732.Using the effective interest method of amortization,which of the following statements is true? Assume interest is paid annually.

Which of the following statements regarding serial bonds is true?

Bonds are generally issued in denominations of $1,000.

Amortization of bond premium results in a(n)

An investor views a high debt-to-equity ratio and a low times interest earned as a favorable sign of a company's abilities to meet its long-term obligations.

When a bond is issued at a discount,the interest expense each year is less than the cash payment for interest.

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?

[APPENDIX] A permanent difference with respect to taxes is a difference that affects the tax records but not the accounting records,or vice versa.

All of the following refer to the face rate of interest on a bond except:

Which of the following statements about bond accounting under the effective interest method is correct?

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