Question 1

A current liability must be paid out of current earnings.

Accepted Answer

A) True 
 B)False

Question 2

The premium on bonds payable may be amortized by the straight-line method if the results obtained by its use do not materially differ from the results obtained by use of the effective-interest method.

Accepted Answer

A) True 
 B)False

Question 3

Sielert Corporation borrowed $1,500,000 from National Bank on May 31, 2019.The three-year, 7% note required annual payments of $571,575 beginning May 31, 2020.Interest expense for the year ended December 31, 2019, was

Accepted Answer

A) $61,250. 
B) $70,000. 
C) $105,000. 
D) $0. 
A) $61,250. 
B) $70,000. 
C) $105,000. 
D) $0.

Question 4

Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

Accepted Answer

A) callable bonds. 
B) early retirement bonds. 
C) options. 
D) debentures. 
A) callable bonds. 
B) early retirement bonds. 
C) options. 
D) debentures.

Question 5

In a recent year Ley Corporation had net income of $150,000, interest expense of $30,000, and a times interest earned ratio of 7.What was Ley Corporation's income before taxes for the year?

Accepted Answer

A) $240,000 
B) $210,000 
C) $180,000 
D) None of these answer choices are correct. 
A) $240,000 
B) $210,000 
C) $180,000 
D) None of these answer choices are correct.

Question 6

Interest expense is reported under Other Expenses and Losses in the income statement.

Accepted Answer

A) True 
 B)False

Question 7

On January 1, Sewell Corporation issues $3,000,000, 5-year, 12% bonds at 96 with interest payable on January 1.What is the carrying value of the bonds at the end of the third interest period?

Accepted Answer

A) $2,952,000 
B) $2,928,000 
C) $2,832,000 
D) $2,784,000 
A) $2,952,000 
B) $2,928,000 
C) $2,832,000 
D) $2,784,000

Question 8

Selling the bonds at a premium has the effect of

Accepted Answer

A) causing the total cost of borrowing to be higher than the bond interest paid. 
B) causing the total cost of borrowing to be lower than the bond interest paid. 
C) raising the effective interest rate above the state interest rate. 
D) increasing the amount of cash paid for interest every 6 months. 
A) causing the total cost of borrowing to be higher than the bond interest paid. 
B) causing the total cost of borrowing to be lower than the bond interest paid. 
C) raising the effective interest rate above the state interest rate. 
D) increasing the amount of cash paid for interest every 6 months.

Question 9

When a monthly mortgage payment is made and recorded, the debit to Mortgage Payable represents the reduction in the principal balance.

Accepted Answer

A) True 
 B)False

Question 10

The following totals for the month of April were taken from the payroll records of Metz Company.   The entry to record the payment of net payroll would include a

Accepted Answer

A) debit to Salaries and Wages Payable for $54,495. 
B) debit to Salaries and Wages Payable for $59,715. 
C) debit to Salaries and Wages Payable for $55,215. 
D) credit to Cash for $55,215. 
A) debit to Salaries and Wages Payable for $54,495. 
B) debit to Salaries and Wages Payable for $59,715. 
C) debit to Salaries and Wages Payable for $55,215. 
D) credit to Cash for $55,215.

Question 11

Mohling Company typically sells subscriptions on an annual basis and publishes eight times a year.The magazine sells 60,000 subscriptions in January at $10 each.What entry is made in January to record the sale of the subscriptions?

Accepted Answer

The answer of Mohling Company typically sells subscriptions on an...

Question 12

Warner Company issued $5,000,000 of 6%, 10-year bonds on one of its interest dates for $4,318,500 to yield an effective annual rate of 8%.The effective-interest method of amortization is to be used.What amount of discount (to the nearest dollar) should be amortized for the first interest period?

Accepted Answer

A) $140,888 
B) $68,150 
C) $90,960 
D) $45,480 
A) $140,888 
B) $68,150 
C) $90,960 
D) $45,480

Question 13

When authorizing bonds to be issued, the board of directors does not specify the

Accepted Answer

A) total number of bonds authorized to be sold. 
B) contractual interest rate. 
C) selling price. 
D) total face value of the bonds. 
A) total number of bonds authorized to be sold. 
B) contractual interest rate. 
C) selling price. 
D) total face value of the bonds.

Question 14

Bonds that are issued against the general credit of the borrower are called

Accepted Answer

A) callable bonds. 
B) debenture bonds. 
C) secured bonds. 
D) term bonds. 
A) callable bonds. 
B) debenture bonds. 
C) secured bonds. 
D) term bonds.

Question 15

Bonds are not always categorized as

Accepted Answer

A) callable or convertible. 
B) term or serial. 
C) secured or unsecured. 
D) secured or debenture. 
A) callable or convertible. 
B) term or serial. 
C) secured or unsecured. 
D) secured or debenture.

Question 16

The following totals for the month of April were taken from the payroll records of Noll Company.   The entry to record accrual of employer's payroll taxes would include a

Accepted Answer

A) debit to Payroll Tax Expense for $2,480. 
B) debit to Payroll Tax Expense for $11,660. 
C) credit to FICA Taxes Payable for $18,360. 
D) credit to Payroll Tax Expense for $2,480. 
A) debit to Payroll Tax Expense for $2,480. 
B) debit to Payroll Tax Expense for $11,660. 
C) credit to FICA Taxes Payable for $18,360. 
D) credit to Payroll Tax Expense for $2,480.

Question 17

Tina's Boutique has total receipts for the month of $32,340 including sales taxes.If the sales tax rate is 5%, what are Tina's sales for the month?

Accepted Answer

A) $30,724 
B) $30,800 
C) $32,340 
D) It cannot be determined. 
A) $30,724 
B) $30,800 
C) $32,340 
D) It cannot be determined.

Question 18

Foley Company issued $2,000,000 of 6%, 5-year bonds at 98, which pay interest annually.Assuming straight-line amortization, what is the total interest cost of the bonds?

Accepted Answer

A) $600,000 
B) $640,000 
C) $560,000 
D) $580,000 
A) $600,000 
B) $640,000 
C) $560,000 
D) $580,000

Question 19

On January 1, Sewell Corporation issues $3,000,000, 5-year, 12% bonds at 96 with interest payable on January 1.The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a

Accepted Answer

A) debit to Interest Expense, $180,000. 
B) debit to Interest Expense, $360,000. 
C) credit to Discount on Bonds Payable, $24,000. 
D) credit to Discount on Bonds Payable, $12,000. 
A) debit to Interest Expense, $180,000. 
B) debit to Interest Expense, $360,000. 
C) credit to Discount on Bonds Payable, $24,000. 
D) credit to Discount on Bonds Payable, $12,000.

Question 20

Unearned revenues are received before goods are delivered or services are rendered.

Accepted Answer

A) True 
 B)False

A current liability must be paid out of current earnings.

The premium on bonds payable may be amortized by the straight-line method if the results obtained by its use do not materially differ from the results obtained by use of the effective-interest method.

Sielert Corporation borrowed $1,500,000 from National Bank on May 31, 2019.The three-year, 7% note required annual payments of $571,575 beginning May 31, 2020.Interest expense for the year ended December 31, 2019, was

Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

In a recent year Ley Corporation had net income of $150,000, interest expense of $30,000, and a times interest earned ratio of 7.What was Ley Corporation's income before taxes for the year?

Interest expense is reported under Other Expenses and Losses in the income statement.

On January 1, Sewell Corporation issues $3,000,000, 5-year, 12% bonds at 96 with interest payable on January 1.What is the carrying value of the bonds at the end of the third interest period?

Selling the bonds at a premium has the effect of

When a monthly mortgage payment is made and recorded, the debit to Mortgage Payable represents the reduction in the principal balance.

The following totals for the month of April were taken from the payroll records of Metz Company. The entry to record the payment of net payroll would include a

Mohling Company typically sells subscriptions on an annual basis and publishes eight times a year.The magazine sells 60,000 subscriptions in January at $10 each.What entry is made in January to record the sale of the subscriptions?

Warner Company issued $5,000,000 of 6%, 10-year bonds on one of its interest dates for $4,318,500 to yield an effective annual rate of 8%.The effective-interest method of amortization is to be used.What amount of discount (to the nearest dollar) should be amortized for the first interest period?

When authorizing bonds to be issued, the board of directors does not specify the

Bonds that are issued against the general credit of the borrower are called

Bonds are not always categorized as

The following totals for the month of April were taken from the payroll records of Noll Company. The entry to record accrual of employer's payroll taxes would include a

Tina's Boutique has total receipts for the month of $32,340 including sales taxes.If the sales tax rate is 5%, what are Tina's sales for the month?

Foley Company issued $2,000,000 of 6%, 5-year bonds at 98, which pay interest annually.Assuming straight-line amortization, what is the total interest cost of the bonds?

On January 1, Sewell Corporation issues $3,000,000, 5-year, 12% bonds at 96 with interest payable on January 1.The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a

Unearned revenues are received before goods are delivered or services are rendered.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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Exam 10: Reporting and Analyzing Liabilities

A current liability must be paid out of current earnings.

The premium on bonds payable may be amortized by the straight-line method if the results obtained by its use do not materially differ from the results obtained by use of the effective-interest method.

Sielert Corporation borrowed $1,500,000 from National Bank on May 31, 2019.The three-year, 7% note required annual payments of $571,575 beginning May 31, 2020.Interest expense for the year ended December 31, 2019, was

Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

In a recent year Ley Corporation had net income of $150,000, interest expense of $30,000, and a times interest earned ratio of 7.What was Ley Corporation's income before taxes for the year?

Interest expense is reported under Other Expenses and Losses in the income statement.

On January 1, Sewell Corporation issues $3,000,000, 5-year, 12% bonds at 96 with interest payable on January 1.What is the carrying value of the bonds at the end of the third interest period?

Selling the bonds at a premium has the effect of

When a monthly mortgage payment is made and recorded, the debit to Mortgage Payable represents the reduction in the principal balance.

The following totals for the month of April were taken from the payroll records of Metz Company. The entry to record the payment of net payroll would include a

Mohling Company typically sells subscriptions on an annual basis and publishes eight times a year.The magazine sells 60,000 subscriptions in January at $10 each.What entry is made in January to record the sale of the subscriptions?

Warner Company issued $5,000,000 of 6%, 10-year bonds on one of its interest dates for $4,318,500 to yield an effective annual rate of 8%.The effective-interest method of amortization is to be used.What amount of discount (to the nearest dollar) should be amortized for the first interest period?

When authorizing bonds to be issued, the board of directors does not specify the

Bonds that are issued against the general credit of the borrower are called

Bonds are not always categorized as

The following totals for the month of April were taken from the payroll records of Noll Company. The entry to record accrual of employer's payroll taxes would include a

Tina's Boutique has total receipts for the month of $32,340 including sales taxes.If the sales tax rate is 5%, what are Tina's sales for the month?

Foley Company issued $2,000,000 of 6%, 5-year bonds at 98, which pay interest annually.Assuming straight-line amortization, what is the total interest cost of the bonds?

On January 1, Sewell Corporation issues $3,000,000, 5-year, 12% bonds at 96 with interest payable on January 1.The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a

Unearned revenues are received before goods are delivered or services are rendered.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

Filters