Question 1

An unsecured bond is the same as a

Accepted Answer

A) term bond. 
B) zero coupon bond. 
C) debenture bond. 
D) bond indenture. 
A) term bond. 
B) zero coupon bond. 
C) debenture bond. 
D) bond indenture.

Question 2

When determining the value of a bond using present value,what are the two components used in the calculation?

Accepted Answer

One component is the present v

Question 3

When the present value of a bond issue is calculated,both the present value of a single sum and the present value of an annuity must be calculated.

Accepted Answer

A) True 
 B)False

Question 4

Under a defined benefit pension plan,

Accepted Answer

A) actuarial computations are unnecessary. 
B) accounting for annual pension expense is simple. 
C) retirement payments are based on the amount accumulated in the pension fund. 
D) the employer guarantees the employees certain benefits upon retirement. 
A) actuarial computations are unnecessary. 
B) accounting for annual pension expense is simple. 
C) retirement payments are based on the amount accumulated in the pension fund. 
D) the employer guarantees the employees certain benefits upon retirement.

Question 5

On December 31,20x5,the balance sheet of the Nowicki Company reported 2,000 bonds outstanding with a face value of $1,000,000 and a related unamortized discount of $70,000.The bonds are convertible at the rate of 25 shares of common stock for each $1,000 bond.On January 1,20x6 ,the bondholders presented $800,000 of the bonds for conversion.The entry to record this conversion contained a credit to Additional Paid-in Capital for $344,000.Calculate the par value per share of the common stock.

Accepted Answer

$20.00 [800,000 - ($

Question 6

A bond indenture is

Accepted Answer

A) a bond that is secured by specific assets of the issuing corporation. 
B) the agreement between the issuing corporation and the bondholders. 
C) a bond that is unsecured. 
D) a bond that has past due interest payments. 
A) a bond that is secured by specific assets of the issuing corporation. 
B) the agreement between the issuing corporation and the bondholders. 
C) a bond that is unsecured. 
D) a bond that has past due interest payments.

Question 7

A company has $1,606,000 in bonds payable with an unamortized premium of $40,000.If one-fourth of the bonds are converted to common stock,the carrying value of the bonds will decrease by

Accepted Answer

A) $401,500. 
B) $441,500. 
C) $391,500. 
D) $411,500. 
A) $401,500. 
B) $441,500. 
C) $391,500. 
D) $411,500.

Question 8

The par value of a bond is equal to its face value.

Accepted Answer

A) True 
 B)False

Question 9

If Rex Corporation issued ten $1,000 bonds issued at 99.75 on the interest date,the entry to record this transaction is :

Accepted Answer

A) Cash 990.75 Bonds Payable 990.75 
B) Cash 9,907.50 Bonds Payable 9,907.50 
C) Cash 997.50 Bonds Payable 997.50 
D) Cash 9,975 Unamortized bond
Discount 25
Bonds Payable 10,000 
A) Cash 990.75 Bonds Payable 990.75 
B) Cash 9,907.50 Bonds Payable 9,907.50 
C) Cash 997.50 Bonds Payable 997.50 
D) Cash 9,975 Unamortized bond
Discount 25
Bonds Payable 10,000

Question 10

Which of the following is correct regarding the present value calculations associated with bonds?

Accepted Answer

A) The amount of interest a bond pays is fixed over its life. 
B) The market interest rate varies from day to day and is the rate used to determine the bond's present value. 
C) The amount investors are willing to pay for a bond varies because the bond's present value changes as the market interest rate changes. 
D) All of these choices. 
A) The amount of interest a bond pays is fixed over its life. 
B) The market interest rate varies from day to day and is the rate used to determine the bond's present value. 
C) The amount investors are willing to pay for a bond varies because the bond's present value changes as the market interest rate changes. 
D) All of these choices.

Question 11

An adjustment must be made at the end of an accounting period to accrue the interest expense on bonds payable and to amortize any related premium or discount from the last interest payment date to the end of the fiscal year.

Accepted Answer

A) True 
 B)False

Question 12

The entry to record the issuance of bonds between interest payment dates will include a debit to Bond Interest Expense.

Accepted Answer

A) True 
 B)False

Question 13

Weller Co.issued $600,000 of 30-year,8 percent bonds at 106 on one of its semiannual interest dates.The straight-line method of amortization is to be used.What is the total interest cost of the bonds?

Accepted Answer

A) $1,439,000 
B) $1,404,000 
C) $1,440,000 
D) $1,476,000 
A) $1,439,000 
B) $1,404,000 
C) $1,440,000 
D) $1,476,000

Question 14

Bondholders share voting rights with stockholders.

Accepted Answer

A) True 
 B)False

Question 15

The most common type of long-term debt is a

Accepted Answer

A) note payable. 
B) bond payable. 
C) mortgage payable. 
D) pension. 
A) note payable. 
B) bond payable. 
C) mortgage payable. 
D) pension.

Question 16

Under a capital lease,each monthly payment is debited by the lessee to Rent Expense.

Accepted Answer

A) True 
 B)False

Question 17

Other postretirement benefits should be expensed

Accepted Answer

A) on the employee's retirement date. 
B) as they are received by the employee. 
C) when the employee is hired. 
D) as the employee earns them. 
A) on the employee's retirement date. 
B) as they are received by the employee. 
C) when the employee is hired. 
D) as the employee earns them.

Question 18

When the board of directors decides to issue bonds,it is necessary to make an entry to record the SEC's authorization of the bond issue.

Accepted Answer

A) True 
 B)False

Question 19

The entry to record the issuance of bonds at a premium includes a credit to the Unamortized Bond Premium account.

Accepted Answer

A) True 
 B)False

Question 20

The carrying value of a bond issued at a premium is calculated at any given point in time by adding the balance of the unamortized premium to the bond's face value.

Accepted Answer

A) True 
 B)False

An unsecured bond is the same as a

When determining the value of a bond using present value,what are the two components used in the calculation?

When the present value of a bond issue is calculated,both the present value of a single sum and the present value of an annuity must be calculated.

Under a defined benefit pension plan,

A bond indenture is

A company has $1,606,000 in bonds payable with an unamortized premium of $40,000.If one-fourth of the bonds are converted to common stock,the carrying value of the bonds will decrease by

The par value of a bond is equal to its face value.

If Rex Corporation issued ten $1,000 bonds issued at 99.75 on the interest date,the entry to record this transaction is :

Which of the following is correct regarding the present value calculations associated with bonds?

An adjustment must be made at the end of an accounting period to accrue the interest expense on bonds payable and to amortize any related premium or discount from the last interest payment date to the end of the fiscal year.

The entry to record the issuance of bonds between interest payment dates will include a debit to Bond Interest Expense.

Weller Co.issued $600,000 of 30-year,8 percent bonds at 106 on one of its semiannual interest dates.The straight-line method of amortization is to be used.What is the total interest cost of the bonds?

Bondholders share voting rights with stockholders.

The most common type of long-term debt is a

Under a capital lease,each monthly payment is debited by the lessee to Rent Expense.

Other postretirement benefits should be expensed

When the board of directors decides to issue bonds,it is necessary to make an entry to record the SEC's authorization of the bond issue.

The entry to record the issuance of bonds at a premium includes a credit to the Unamortized Bond Premium account.

The carrying value of a bond issued at a premium is calculated at any given point in time by adding the balance of the unamortized premium to the bond's face value.

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

An unsecured bond is the same as a

When determining the value of a bond using present value,what are the two components used in the calculation?

When the present value of a bond issue is calculated,both the present value of a single sum and the present value of an annuity must be calculated.

Under a defined benefit pension plan,

A bond indenture is

A company has $1,606,000 in bonds payable with an unamortized premium of $40,000.If one-fourth of the bonds are converted to common stock,the carrying value of the bonds will decrease by

The par value of a bond is equal to its face value.

If Rex Corporation issued ten $1,000 bonds issued at 99.75 on the interest date,the entry to record this transaction is :

Which of the following is correct regarding the present value calculations associated with bonds?

An adjustment must be made at the end of an accounting period to accrue the interest expense on bonds payable and to amortize any related premium or discount from the last interest payment date to the end of the fiscal year.

The entry to record the issuance of bonds between interest payment dates will include a debit to Bond Interest Expense.

Weller Co.issued $600,000 of 30-year,8 percent bonds at 106 on one of its semiannual interest dates.The straight-line method of amortization is to be used.What is the total interest cost of the bonds?

Bondholders share voting rights with stockholders.

The most common type of long-term debt is a

Under a capital lease,each monthly payment is debited by the lessee to Rent Expense.

Other postretirement benefits should be expensed

When the board of directors decides to issue bonds,it is necessary to make an entry to record the SEC's authorization of the bond issue.

The entry to record the issuance of bonds at a premium includes a credit to the Unamortized Bond Premium account.

The carrying value of a bond issued at a premium is calculated at any given point in time by adding the balance of the unamortized premium to the bond's face value.

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