ch 10 accg quiz

Which of the following is a typical current liability? Sales taxes payable None of these are typically current liabilities Bonds payable All of these are typically current liabilities Maturities of notes payable due in more than one year

What term is used for bonds that give the bondholder an option to exchange the bond for shares of the company's common stock? Convertible bonds Secured bonds Callable bonds Discount bonds Unsecured bonds

A corporation issues $1,000,000 of 8%, 5-year bonds when bonds of similar risk are paying 9%. The 8% rate of interest is called the __________ rate. yield term effective market contractual

Low Flow Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a premium, what does this indicate? The contractual interest rate exceeds the market interest rate. The contractual interest rate and the market interest rate are the same. No relationship exists between the market and contractual rates. You Answered The market interest rate exceeds the contractual interest rate. The bonds are redeemable.

Tanner, Inc. issued a 9%, 5-year, $100,000 bond when the market rate of interest was 7%. The bond sell at face value. par. a discount. proceed value. a premium.

When a bond is issued at a discount, at what value is it reported on the balance sheet? Redeemable value Face value minus any unamortized discount Market value minus face value Face value minus any amortized discount Face value minus market value

When a bond is sold at a premium, at what value is it reported on the balance sheet? Face value minus any unamortized premium Redeemable value Face value plus any unamortized premium Face value plus any amortized premium Face value minus any amortized premium

In order for a liability to be classified as a current liability, it must be a debt that the company expects to pay through the creation of other current liabilities. expects to pay with cash. expects to pay from neither existing current assets nor through the creation of other current liabilities. expects to pay from existing current assets. expects to pay from existing current assets or through the creation of other current liabilities.

Which one of the following is not a typical current liability? Accounts payable Federal unemployment taxes Unpaid note payable that is due after the next year Unpaid note payable that is due in the next year Salaries and wages payable

What term is used for bonds that give the bondholder an option to exchange the bond for shares of the company's common stock? Convertible bonds Discount bonds Secured bonds Callable bonds Unsecured bonds

How is the market value of a bond issuance determined? By adding the present value of the principal amount to the present value of the interest payments By adding the stated value of the principal amount to the stated value of the interest payments By adding the By adding the face value of the principal amount to the coupon value of the interest payments terminal value of the principal amount to the terminal value of the interest payments By adding the nominal value of the principal amount to the nominal value of the interest payments By adding the face value of the principal amount to the coupon value of the interest payments

Which statement describes the market interest rate? It is the rate investors' demand for loaning funds. It is listed in the bond indenture. It is the coupon rate stated on the bond certificate that determines the period interest payments. All of these It is the contractual interest rate used to determine the amount of cash interest paid by the borrower.

Low Flow Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued for $198,000, what does this indicate? No relationship exists between the market and contractual rates. The contractual interest rate exceeds the market interest rate. The contractual interest rate and the market interest rate are the same. The market interest rate exceeds the contractual interest rate. The bonds do not have a contractual interest rate.

Tanner, Inc. issued a 10%, 5-year, $100,000 bond when the market rate of interest was 12%. The bond will sell at face value. par. stated value. a premium. a discount.

What is the effect of amortizing a bond discount? It increases the carrying value of the bonds. It does not affect the carrying value of the bonds. Its effect on the carrying value of bonds cannot be determined without knowing the maturity date of the bond. None of these are true It decreases the carrying value of the bonds.

When a bond is sold at a premium, at what value is it reported on the balance sheet? Face value plus any amortized premium Face value minus any unamortized premium Face value minus any amortized premium Redeemable value Face value plus any unamortized premium

In order for a liability to be classified as a current liability, it must be a debt that the company expects to pay with cash. expects to pay from existing current assets or through the creation of other current liabilities. expects to pay from neither existing current assets nor through the creation of other current liabilities. expects to pay from existing current assets. expects to pay through the creation of other current liabilities.

A professional team sells season tickets to its fans. There are 10 home games during the season. This year's season tickets sold for a total of $12,000,000 cash. Which account will be credited by the team upon receipt of the $12,000,000? Correct Answer Unearned Ticket Revenue Ticket Revenue Prepaid Tickets Tickets Receivable Cash

What term is used for bonds that have specific assets pledged as collateral? Secured bonds Term bonds Discount bonds Convertible bonds Callable bonds

A corporation issues $1,000,000 of 8%, 5-year bonds when bonds of similar risk are paying 9%. The 8% rate of interest is called the __________ rate. term market yield effective contractual

Low Flow Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a premium, what does this indicate? The contractual interest rate exceeds the market interest rate. The bonds are redeemable. The market interest rate exceeds the contractual interest rate. The contractual interest rate and the market interest rate are the same. No relationship exists between the market and contractual rates.

When a bond is sold at a premium, at what amount is it reported on the balance sheet? Fair market value Interest value Premium value Carrying value Market value

When a bond is issued at a discount, at what value is it reported on the balance sheet? Face value minus any amortized discount Face value minus any unamortized discount Redeemable value Face value minus market value Market value minus face value

When a bond is sold at a premium, at what value is it reported on the balance sheet? Redeemable value Face value minus any amortized premium Face value plus any amortized premium Face value plus any unamortized premium Face value minus any unamortized premium

The person who purchases the bond and holds it as an investment it is called the: bonder bond fiduciary bondholder bond issuer bond agent

Which statement describes the market interest rate? It is the contractual interest rate used to determine the amount of cash interest paid by the borrower. It is the coupon rate stated on the bond certificate that determines the period interest payments. All of these It is listed in the bond indenture. It is the rate investors' demand for loaning funds.

Low Flow Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued for $204,000, what does this indicate? The bonds are callable. The market interest rate exceeds the contractual interest rate. The contractual interest rate and the market interest rate are the same. No relationship exists between the market and contractual rates. The contractual interest rate exceeds the market interest rate.

Tanner, Inc. issued a 10%, 5-year, $100,000 bond when the market rate of interest was 12%. The bond will sell at par. a discount. face value. a premium. stated value.

What is the effect of amortizing a bond discount? It does not affect the carrying value of the bonds. It increases the carrying value of the bonds. None of these are true It decreases the carrying value of the bonds. Its effect on the carrying value of bonds cannot be determined without knowing the maturity date of the bond.

What is the effect of amortizing a bond premium? It does not affect the carrying value of the bonds. It increases the carrying value of the bonds. It increases interest expense. It decreases the carrying value of the bonds. Its effect on the carrying value of bonds cannot be determined without knowing the maturity date of the bond.

How is the market value of a bond issuance determined? By adding the face value of the principal amount to the coupon value of the interest payments By adding the By adding the face value of the principal amount to the coupon value of the interest payments terminal value of the principal amount to the terminal value of the interest payments By adding the present value of the principal amount to the present value of the interest payments By adding the stated value of the principal amount to the stated value of the interest payments By adding the nominal value of the principal amount to the nominal value of the interest payments

Which statement describes the market interest rate? It is the contractual interest rate used to determine the amount of cash interest paid by the borrower. It is the rate investors' demand for loaning funds. It is listed in the bond indenture. All of these It is the coupon rate stated on the bond certificate that determines the period interest payments.

Low Flow Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a premium, what does this indicate? The bonds are redeemable. The contractual interest rate and the market interest rate are the same. No relationship exists between the market and contractual rates. The contractual interest rate exceeds the market interest rate. The market interest rate exceeds the contractual interest rate.

Tanner, Inc. issued a 9%, 5-year, $100,000 bond when the market rate of interest was 7%. The bond sell at a premium. a discount. par. proceed value. face value.

How is the market value of a bond issuance determined? By adding the By adding the face value of the principal amount to the coupon value of the interest payments terminal value of the principal amount to the terminal value of the interest payments By adding the nominal value of the principal amount to the nominal value of the interest payments You Answered By adding the stated value of the principal amount to the stated value of the interest payments By adding the present value of the principal amount to the present value of the interest payments By adding the face value of the principal amount to the coupon value of the interest payments

A corporation issues $1,000,000 of 8%, 5-year bonds when bonds of similar risk are paying 7.5%. The 7.5% rate of interest is called the __________ rate. coupon face stated effective contractual

Low Flow Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued for $198,000, what does this indicate? You Answered The contractual interest rate exceeds the market interest rate. The market interest rate exceeds the contractual interest rate. No relationship exists between the market and contractual rates. The bonds do not have a contractual interest rate. The contractual interest rate and the market interest rate are the same.

When a bond is sold at a premium, at what amount is it reported on the balance sheet? Interest value Carrying value Premium value Market value Fair market value

Which of the following is true with regards to bond discounts? Amortizing a bond discount decreases interest expense. Amortizing a bond discount decreases the maturity value of the bonds. Reporting a bond discount on the balance sheet decreases the bond's carrying value. Reporting a bond discount on the balance sheet increases the bond holder's net income. None of these

What is the effect of amortizing a bond premium? Its effect on the carrying value of bonds cannot be determined without knowing the maturity date of the bond. It does not affect the carrying value of the bonds. It increases the carrying value of the bonds. It decreases the carrying value of the bonds. It increases interest expense.

Which of the following is true with regards to bond discounts? Reporting a bond discount on the balance sheet decreases the bond's carrying value. None of these Reporting a bond discount on the balance sheet increases the bond holder's net income. Amortizing a bond discount decreases interest expense. Amortizing a bond discount decreases the maturity value of the bonds.

What is the nature of a bond premium? It reduces the cost of borrowing. If only affects the cost of borrowing if the bond is convertible. None of the above. It doesn't change the cost of borrowing. It increases the cost of borrowing.