Chap 9

Which of the following is not a true statement

The mixture of debt and equity securities is generally the same for most companies true false

a debt to equity ratio of 1.0 means that half of the company's assets are financed by creditors true false

cash flow generally limits the amount of debt a business can finance true false

The entry to record a monthly payment on an installment note:

In each succeeding payment on an installment note:

In each succeeding payment on an installment note

Definition describing a term bond:

A callable bond allows the holder to repay the bonds before their scheduled maturity date at a specified call price true false

A term used for bonds that are unsecured as to principal is:

Convertible bonds allow the borrower to convert each bond into a specified number of shares of common stock true false

The advantages of obtaining a long-term funds by issuing bonds, rather than issuing additional common stock, include which of the following?

the rate quoted in the bond contract used to calculate the cash payments for interest is called the:

We can calculate the issue price of a bond as the face amount plus the total periodic interest payments true false

A premium occurs when the issue price of a bond is above its face amount true false

the price of a bond is equal to:

bond issued at a discount:

bonds payable should be reported as a long-term liability in the balance sheet:

the cash payment each period is calculated as the carrying value times the market rate: true false

interest expense on bonds payable is calculated as the:

when bonds are issued at a premium (above face amount) the carrying value and the corresponding interest expense increase over time true false

for bonds issued at a premium, the difference between interest expense and the cash paid increases the carrying value times value of the bonds true false

the carrying value, using the effective interest method, would increase each year:

gains/losses on the early extinguishment of debt are reported as part of the operating income statement true false

a gain or loss is recorded on bonds retired at maturity true false

When bonds are retired before their maturity date: