Question 1

The face value of bonds is also the maturity value of the bonds.

Accepted Answer

A) True 
 B)False

Question 2

When the amount of a contingent liability cannot be estimated but its likelihood is probable, the company should:

Accepted Answer

A)  include a description in the footnotes to the financial statements. 
B)  record the amount of the liability times the probability of its occurrence. 
C)  record the amount of the liability as a long-term liability on the balance sheet. 
D)  omit the information about the contingent liability from its financial statements and footnotes. 
A)  include a description in the footnotes to the financial statements. 
B)  record the amount of the liability times the probability of its occurrence. 
C)  record the amount of the liability as a long-term liability on the balance sheet. 
D)  omit the information about the contingent liability from its financial statements and footnotes.

Question 3

When a company issues bonds that do not pay periodic interest, the bonds are called:

Accepted Answer

A)  convertible bonds. 
B)  debenture bonds. 
C)  serial bonds. 
D)  zero-coupon bonds. 
A)  convertible bonds. 
B)  debenture bonds. 
C)  serial bonds. 
D)  zero-coupon bonds.

Question 4

When a company issues bonds that include no periodic interest payments, the bonds are called zero-coupon bonds.

Accepted Answer

A) True 
 B)False

Question 5

A company pays $18,000 in interest on notes, consisting of $12,000 interest that accrued during the last accounting period and $6,000 of interest accumulated during this accounting period but not previously recorded on the books. The journal entry for the interest payment should:

Accepted Answer

A)  debit Interest Expense for $18,000 and credit Cash for $18,000. 
B)  debit Cash for $18,000 and credit Interest Payable for $18,000. 
C)  debit Interest Expense for $6,000, debit Interest Payable $12,000 and credit Cash for $18,000. 
D)  debit Interest Payable for $12,000, debit Accrued Interest $6,000 and credit Cash for $18,000. 
A)  debit Interest Expense for $18,000 and credit Cash for $18,000. 
B)  debit Cash for $18,000 and credit Interest Payable for $18,000. 
C)  debit Interest Expense for $6,000, debit Interest Payable $12,000 and credit Cash for $18,000. 
D)  debit Interest Payable for $12,000, debit Accrued Interest $6,000 and credit Cash for $18,000.

Question 6

The gross pay for all employees is debited to Wages Payable.

Accepted Answer

A) True 
 B)False

Question 7

A company issued $100,000 5-year, 7% bonds and received $101,137 in cash. The market rate of interest when the bonds were issued was 6.5%. What is the amount of interest expense to be recorded for the first annual interest period if the company uses the effective-interest method of amortization?

Accepted Answer

A)  $6,573.91 
B)  $7,000.00 
C)  $6,500.00 
D)  $7,079.59 
A)  $6,573.91 
B)  $7,000.00 
C)  $6,500.00 
D)  $7,079.59

Question 8

Operating cycles are generally longer than a year.

Accepted Answer

A) True 
 B)False

Question 9

The threshold for recording contingent liabilities under IFRS is lower than that under GAAP.
considered to be more likely than not to occur; whereas, GAAP states that an estimated loss is recorded if it is
probable.

Accepted Answer

A) True 
 B)False

Question 10

Bonds that are backed by a company's assets are called secured bonds.

Accepted Answer

A) True 
 B)False

Question 11

At the date of maturity, the carrying value of a bond should always be equal to the face value.

Accepted Answer

A) True 
 B)False

Question 12

A company pays $9,000 in interest on notes consisting of $6,000 of interest that was accrued during the last accounting period and $3,000 of interest that accumulated during this accounting period that has not yet been accrued on the books. The journal entry for the interest payment should:

Accepted Answer

A)  debit Interest Expense $9,000 and credit Cash $9,000. 
B)  debit Cash $9,000 and credit Interest Payable $9,000. 
C)  debit Interest Expense $3,000, debit Interest Payable $6,000, and credit Cash $9,000. 
D)  debit Interest Payable $6,000, debit Accrued Interest $3,000, and credit Cash $9,000. 
A)  debit Interest Expense $9,000 and credit Cash $9,000. 
B)  debit Cash $9,000 and credit Interest Payable $9,000. 
C)  debit Interest Expense $3,000, debit Interest Payable $6,000, and credit Cash $9,000. 
D)  debit Interest Payable $6,000, debit Accrued Interest $3,000, and credit Cash $9,000.

Question 13

On January 1, your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 7%. The market interest rate is 5%. The issue price of the bond was $10,866. Using the effective-interest
Method of amortization and rounding to the nearest dollar, the interest expense for the first year ended
December 31 would be:

Accepted Answer

A)  $700. 
B)  $543 
C)  $667. 
D)  $759 
A)  $700. 
B)  $543 
C)  $667. 
D)  $759

The face value of bonds is also the maturity value of the bonds.

When the amount of a contingent liability cannot be estimated but its likelihood is probable, the company should:

When a company issues bonds that do not pay periodic interest, the bonds are called:

When a company issues bonds that include no periodic interest payments, the bonds are called zero-coupon bonds.

A company pays $18,000 in interest on notes, consisting of $12,000 interest that accrued during the last accounting period and $6,000 of interest accumulated during this accounting period but not previously recorded on the books. The journal entry for the interest payment should:

The gross pay for all employees is debited to Wages Payable.

A company issued $100,000 5-year, 7% bonds and received $101,137 in cash. The market rate of interest when the bonds were issued was 6.5%. What is the amount of interest expense to be recorded for the first annual interest period if the company uses the effective-interest method of amortization?

Operating cycles are generally longer than a year.

The threshold for recording contingent liabilities under IFRS is lower than that under GAAP. considered to be more likely than not to occur; whereas, GAAP states that an estimated loss is recorded if it is probable.

Bonds that are backed by a company's assets are called secured bonds.

At the date of maturity, the carrying value of a bond should always be equal to the face value.

A company pays $9,000 in interest on notes consisting of $6,000 of interest that was accrued during the last accounting period and $3,000 of interest that accumulated during this accounting period that has not yet been accrued on the books. The journal entry for the interest payment should:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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Exam 10: Reporting and Interpreting Liabilities

The face value of bonds is also the maturity value of the bonds.

When the amount of a contingent liability cannot be estimated but its likelihood is probable, the company should:

When a company issues bonds that do not pay periodic interest, the bonds are called:

When a company issues bonds that include no periodic interest payments, the bonds are called zero-coupon bonds.

A company pays $18,000 in interest on notes, consisting of $12,000 interest that accrued during the last accounting period and $6,000 of interest accumulated during this accounting period but not previously recorded on the books. The journal entry for the interest payment should:

The gross pay for all employees is debited to Wages Payable.

A company issued $100,000 5-year, 7% bonds and received $101,137 in cash. The market rate of interest when the bonds were issued was 6.5%. What is the amount of interest expense to be recorded for the first annual interest period if the company uses the effective-interest method of amortization?

Operating cycles are generally longer than a year.

The threshold for recording contingent liabilities under IFRS is lower than that under GAAP. considered to be more likely than not to occur; whereas, GAAP states that an estimated loss is recorded if it is probable.

Bonds that are backed by a company's assets are called secured bonds.

At the date of maturity, the carrying value of a bond should always be equal to the face value.

A company pays $9,000 in interest on notes consisting of $6,000 of interest that was accrued during the last accounting period and $3,000 of interest that accumulated during this accounting period that has not yet been accrued on the books. The journal entry for the interest payment should:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters