Question 1

The market interest rate is also called the face interest rate.

Accepted Answer

A) True 
 B)False  False

Question 2

Under a capital lease,the lessee records both an asset and a liability.

Accepted Answer

A) True 
 B)False  True

Question 3

Mortgages payable

Accepted Answer

A) are usually paid in monthly installments. 
B) have payments that include both interest on the debt and reduction in the debt. 
C) are secured by real property. 
D) All of these choices. 
A) are usually paid in monthly installments. 
B) have payments that include both interest on the debt and reduction in the debt. 
C) are secured by real property. 
D) All of these choices. D

Question 4

Bonds that contain a provision that allows the holders to exchange the bonds for other securities of the issuing corporation are called

Accepted Answer

A) debenture bonds. 
B) secured bonds. 
C) callable bonds. 
D) convertible bonds. 
A) debenture bonds. 
B) secured bonds. 
C) callable bonds. 
D) convertible bonds.

Question 5

The debt to equity ratio is a measure of financial leverage.

Accepted Answer

A) True 
 B)False

Question 6

The calculation of cash for interest to be paid each interest period in connection with a bond payable is not influenced by any premium or discount upon issuance.

Accepted Answer

A) True 
 B)False

Question 7

Interest on bonds usually is paid monthly.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not needed in calculating the value of a bond?

Accepted Answer

A) Face interest rate 
B) Market interest rate 
C) Future value of periodic interest payments 
D) Present value of face (maturity)amount 
A) Face interest rate 
B) Market interest rate 
C) Future value of periodic interest payments 
D) Present value of face (maturity)amount

Question 9

When fixed mortgage payments are made,in what way does the interest portion change each month,and why?

Accepted Answer

Each month,the basis for the interest ca

Question 10

A bond sells at the face value when the face interest rate of the bond is identical to the market interest rate for similar bonds on the date of the issue.

Accepted Answer

A) True 
 B)False

Question 11

Financial leverage refers to the issuance of stock to raise cash.

Accepted Answer

A) True 
 B)False

Question 12

When the effective interest method of amortization is used,the amount of bond interest expense for a given period is calculated by multiplying the face interest rate by the bond's carrying value at the beginning of the given period.

Accepted Answer

A) True 
 B)False

Question 13

Under the effective interest method of amortizing a bond discount,the bond interest expense recorded for each period decreases over the life of the bond.

Accepted Answer

A) True 
 B)False

Question 14

Technically,what is meant by the amortization of a bond discount,and why is it necessary?

Accepted Answer

Amortization of a bond discount is the p

Question 15

On January 2,20x5,Clair Inc.signed a 9% mortgage payable for $200,000 with equal monthly payments of $2,400.When Clair makes the second payment,how much interest expense will be recorded?

Accepted Answer

A) $0 
B) $1,494. 
C) $1,500. 
D) $1,482. 
A) $0 
B) $1,494. 
C) $1,500. 
D) $1,482.

Question 16

Under a capital lease,the lessee does all of the following except:

Accepted Answer

A) debits Capital Lease Equipment. 
B) debits Rent Expense. 
C) records depreciation on the leased asset. 
D) credits Capital Lease Obligations. 
A) debits Capital Lease Equipment. 
B) debits Rent Expense. 
C) records depreciation on the leased asset. 
D) credits Capital Lease Obligations.

Question 17

A capital lease represents both an asset and a liability.

Accepted Answer

A) True 
 B)False

Question 18

Interest on debt is tax-deductible to the issuing corporation,whereas dividends on stock are not.

Accepted Answer

A) True 
 B)False

Question 19

The lower the debt to equity ratio,the greater the financial risk the company is taking.

Accepted Answer

A) True 
 B)False

Question 20

The interest coverage ratio measures the degree of protection a company has from default on interest payments.

Accepted Answer

A) True 
 B)False

The market interest rate is also called the face interest rate.

Under a capital lease,the lessee records both an asset and a liability.

Mortgages payable

Bonds that contain a provision that allows the holders to exchange the bonds for other securities of the issuing corporation are called

The debt to equity ratio is a measure of financial leverage.

The calculation of cash for interest to be paid each interest period in connection with a bond payable is not influenced by any premium or discount upon issuance.

Interest on bonds usually is paid monthly.

Which of the following is not needed in calculating the value of a bond?

When fixed mortgage payments are made,in what way does the interest portion change each month,and why?

A bond sells at the face value when the face interest rate of the bond is identical to the market interest rate for similar bonds on the date of the issue.

Financial leverage refers to the issuance of stock to raise cash.

When the effective interest method of amortization is used,the amount of bond interest expense for a given period is calculated by multiplying the face interest rate by the bond's carrying value at the beginning of the given period.

Under the effective interest method of amortizing a bond discount,the bond interest expense recorded for each period decreases over the life of the bond.

Technically,what is meant by the amortization of a bond discount,and why is it necessary?

On January 2,20x5,Clair Inc.signed a 9% mortgage payable for $200,000 with equal monthly payments of $2,400.When Clair makes the second payment,how much interest expense will be recorded?

Under a capital lease,the lessee does all of the following except:

A capital lease represents both an asset and a liability.

Interest on debt is tax-deductible to the issuing corporation,whereas dividends on stock are not.

The lower the debt to equity ratio,the greater the financial risk the company is taking.

The interest coverage ratio measures the degree of protection a company has from default on interest payments.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters

Exam 14: Long Term Liabilities

The market interest rate is also called the face interest rate.

Under a capital lease,the lessee records both an asset and a liability.

Mortgages payable

Bonds that contain a provision that allows the holders to exchange the bonds for other securities of the issuing corporation are called

The debt to equity ratio is a measure of financial leverage.

The calculation of cash for interest to be paid each interest period in connection with a bond payable is not influenced by any premium or discount upon issuance.

Interest on bonds usually is paid monthly.

Which of the following is not needed in calculating the value of a bond?

When fixed mortgage payments are made,in what way does the interest portion change each month,and why?

A bond sells at the face value when the face interest rate of the bond is identical to the market interest rate for similar bonds on the date of the issue.

Financial leverage refers to the issuance of stock to raise cash.

When the effective interest method of amortization is used,the amount of bond interest expense for a given period is calculated by multiplying the face interest rate by the bond's carrying value at the beginning of the given period.

Under the effective interest method of amortizing a bond discount,the bond interest expense recorded for each period decreases over the life of the bond.

Technically,what is meant by the amortization of a bond discount,and why is it necessary?

On January 2,20x5,Clair Inc.signed a 9% mortgage payable for $200,000 with equal monthly payments of $2,400.When Clair makes the second payment,how much interest expense will be recorded?

Under a capital lease,the lessee does all of the following except:

A capital lease represents both an asset and a liability.

Interest on debt is tax-deductible to the issuing corporation,whereas dividends on stock are not.

The lower the debt to equity ratio,the greater the financial risk the company is taking.

The interest coverage ratio measures the degree of protection a company has from default on interest payments.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters