Question 1

If the market interest rate at the date of a bond issue is greater than the coupon interest rate, the bond will be issued at a premium.

Accepted Answer

A) True 
 B)False

Question 2

Use the following information to answer questions 
Angel Eyes Corporation operates on a calendar year basis.The company is in its first year of operations and received its annual property tax bill on March 31 for $21,000.The bill is due May 1.Even though the company records adjusting entries on a monthly basis, no entries related to property taxes have been recorded.
-The March 31 entry to record property tax should be

Accepted Answer

A)  debit property tax expense $5,250 and credit property tax payable $5,250.
B)  debit property tax expense $21,000 and credit property tax payable $21,000.
C)  debits to prepaid property tax and property tax expense for $15,750 and $5,250, respectively and credits to property tax payable and cash for $15,750 and $5,250, respectively.
D)  debits to prepaid property tax and property tax expense for $15,750 and $5,250, respectively and credit to property tax payable for $21,000.E) B) and C)
F) A) and B)

Question 3

With loans that have equal periodic instalment payments, the interest portion of the payment___ each period as the principal portion of the payment ___.

Accepted Answer

A)   decreases, decreases
B)   increases, increases
C)   increases, decreases
D)   decreases, increasesE) A) and D)
F) B) and D)

Question 4

Last year, Hadley Bakery's statement of income reported the following: net income, $325,600; interest expense, $81,400; and income tax expense, $113,960.The company's times interest earned ratio is

Accepted Answer

A)  5.0 times.
B)  6.4 times.
C)  4.0 times.
D)  4.6 times.E) A) and B)
F) B) and C)

Question 5

Under IFRS, if a company can determine a reasonable estimate of an expected loss from a lawsuit and it is probable it will lose the suit, it should

Accepted Answer

A)  disclose the basic facts regarding the suit in the notes to its financial statements.
B)  accrue the loss.
C)  neither disclose in the notes nor accrue the loss.
D)  pay the amount estimated.E) A) and B)
F) A) and C)

Question 6

Long-term notes may have

Accepted Answer

A)   fixed rates of interest only.
B)   floating interest rates only.
C)   no interest rates.
D)   fixed or floating interest rates.E) C) and D)
F) A) and B)

Question 7

While short-term notes are generally repayable in full at maturity, most long-term notes are repayable in a series of periodic payments called instalments.

Accepted Answer

A) True 
 B)False

Question 8

On March 1, Brutto Corp.issues a 3 year, 5%, $60,000 bond at face value.Interest is paid semi-annually.The entry to record the first interest payment will include a

Accepted Answer

A)  debit to Bonds Payable of $3,000.
B)  debit to Cash of $1,500.
C)  credit to Interest Expense of $3,000.
D)  debit to Interest Expense of $1,500.E) All of the above
F) A) and B)

Question 9

The journal entry to record the issue of bonds at a discount will include a

Accepted Answer

A)  debit to Cash for the face amount of the bonds.
B)  debit to Cash for the face amount of the bonds plus the amount of the discount.
C)  debit to Cash for the face amount of the bonds minus the amount of the discount.
D)  credit to Cash for the face amount of the bonds.Use the information below to answer questions 90-91.Coldwater Inc.issues $575,000 of 4%, 8-year bonds for cash proceeds of $502,774.The market interest rate is 6%.Interest is paid semi-annually.E) A) and C)
F) All of the above

Question 10

Which of the following statements is true?

Accepted Answer

A)  Liquidity ratios measure a company's long-term ability to pay debt.
B)  Solvency ratios measure a company's ability to repay current debt.
C)  A high liquidity ratio generally indicates that a company has a greater ability to meet its current obligations.
D)  Solvency ratios measure a company's ability to survive on a short-term basis.E) B) and C)
F) All of the above

Question 11

The market interest rate is often called the

Accepted Answer

A)  stated interest rate.
B)  effective interest rate.
C)  contractual interest rate.
D)  coupon interest rate.E) B) and C)
F) All of the above

Question 12

Interest (finance) expenses are separately reported in the "other gain and revenues" section of the statement of income.

Accepted Answer

A) True 
 B)False

Exam 10: Reporting and Analyzing Liabilities

The market interest rate is often called the

Correct Answer
verified

Long-term notes may have

Correct Answer
verified

Under IFRS, if a company can determine a reasonable estimate of an expected loss from a lawsuit and it is probable it will lose the suit, it should

Correct Answer
verified

Correct Answer
verified

While short-term notes are generally repayable in full at maturity, most long-term notes are repayable in a series of periodic payments called instalments.

Correct Answer
verified

Last year, Hadley Bakery's statement of income reported the following: net income, $325,600; interest expense, $81,400; and income tax expense, $113,960.The company's times interest earned ratio is

Correct Answer
verified

The journal entry to record the issue of bonds at a discount will include a

Correct Answer
verified

Interest (finance) expenses are separately reported in the "other gain and revenues" section of the statement of income.

Correct Answer
verified

If the market interest rate at the date of a bond issue is greater than the coupon interest rate, the bond will be issued at a premium.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
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With loans that have equal periodic instalment payments, the interest portion of the payment_ each period as the principal portion of the payment _.

Correct Answer
verified

On March 1, Brutto Corp.issues a 3 year, 5%, $60,000 bond at face value.Interest is paid semi-annually.The entry to record the first interest payment will include a

Correct Answer
verified

Exam 10: Reporting and Analyzing Liabilities

The market interest rate is often called the

Correct AnswerverifiedShow Answer

Long-term notes may have

Correct AnswerverifiedShow Answer

Under IFRS, if a company can determine a reasonable estimate of an expected loss from a lawsuit and it is probable it will lose the suit, it should

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

While short-term notes are generally repayable in full at maturity, most long-term notes are repayable in a series of periodic payments called instalments.

Correct AnswerverifiedShow Answer

Last year, Hadley Bakery's statement of income reported the following: net income, $325,600; interest expense, $81,400; and income tax expense, $113,960.The company's times interest earned ratio is

Correct AnswerverifiedShow Answer

The journal entry to record the issue of bonds at a discount will include a

Correct AnswerverifiedShow Answer

Interest (finance) expenses are separately reported in the "other gain and revenues" section of the statement of income.

Correct AnswerverifiedShow Answer

If the market interest rate at the date of a bond issue is greater than the coupon interest rate, the bond will be issued at a premium.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

With loans that have equal periodic instalment payments, the interest portion of the payment___ each period as the principal portion of the payment ___.

Correct AnswerverifiedShow Answer

On March 1, Brutto Corp.issues a 3 year, 5%, $60,000 bond at face value.Interest is paid semi-annually.The entry to record the first interest payment will include a

Correct AnswerverifiedShow Answer

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With loans that have equal periodic instalment payments, the interest portion of the payment_ each period as the principal portion of the payment _.

Correct Answer
verified

Correct Answer
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