Question 1

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

Question 2

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 3

Which of the following statements is false?

Accepted Answer

A)  With blended principal and interest payments, the equal periodic payments result in the interest portion increasing each period. 
B)  With blended principal and interest payments, the equal periodic payments result in the principal portion increasing each period. 
C)  With blended principal and interest payments, the equal periodic payments result in the interest portion decreasing each period. 
D)  With blended principal and interest payments, the equal periodic payments are constant each period. 
A)  With blended principal and interest payments, the equal periodic payments result in the interest portion increasing each period. 
B)  With blended principal and interest payments, the equal periodic payments result in the principal portion increasing each period. 
C)  With blended principal and interest payments, the equal periodic payments result in the interest portion decreasing each period. 
D)  With blended principal and interest payments, the equal periodic payments are constant each period.

Question 4

$2 million, 6%, 10-year bonds are issued when the market rate is 8%. Interest will be paid quarterly. When calculating the issue price of the bond, the interest rate to be used to calculate the present value of the face amount and the present value of the periodic interest payments is

Accepted Answer

A)  4%. 
B)  8%. 
C)  6%. 
D)  2%. 
A)  4%. 
B)  8%. 
C)  6%. 
D)  2%.

Question 5

When a long-term note payable with a fixed interest rate has fixed principal payments, it means that

Accepted Answer

A)  the periodic payment amount is fixed. 
B)  the periodic payment increases over time. 
C)  the periodic payment decreases over time. 
D)  no conclusion can be made on the periodic payment. 
A)  the periodic payment amount is fixed. 
B)  the periodic payment increases over time. 
C)  the periodic payment decreases over time. 
D)  no conclusion can be made on the periodic payment.

Question 6

Which of the following statements is true?

Accepted Answer

A)  If any portion of a non-current liability is to be paid in the next year, the entire debt should be classified as a current liability. 
B)  "Current maturities of non-current debt" refers to the amount of interest on notes payable that must be paid in the current year. 
C)  Even though current and non-current debt must be shown separately on the statement of financial position, it is not necessary to prepare a journal entry to recognize this. 
D)  A non- current liability is an obligation that is expected to be paid within one year. 
A)  If any portion of a non-current liability is to be paid in the next year, the entire debt should be classified as a current liability. 
B)  "Current maturities of non-current debt" refers to the amount of interest on notes payable that must be paid in the current year. 
C)  Even though current and non-current debt must be shown separately on the statement of financial position, it is not necessary to prepare a journal entry to recognize this. 
D)  A non- current liability is an obligation that is expected to be paid within one year.

Question 7

Instalments can be paid

Accepted Answer

A)  monthly. 
B)  quarterly. 
C)  semi-annually. 
D)  all of the above 
A)  monthly. 
B)  quarterly. 
C)  semi-annually. 
D)  all of the above

Question 8

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. 
A)  stated interest rate. 
B)  effective interest rate. 
C)  contractual interest rate. 
D)  coupon interest rate.

Question 9

On December 31, 2018, Industrial Exporters issues a $365,000, 6%, 20-year mortgage. The terms require monthly payments of $2,615 (principal and interest - blended payment).InstructionsPrepare the journal entry for Jan 31, 2019 to record the first monthly payment. Include your calculations.

Accepted Answer

@#IMG-DLM& Calculations: $365,

Question 10

As blended principal and interest payments are made on a long-term loan,

Accepted Answer

A)  the interest portion increases and the principal portion decreases. 
B)  the interest and principal portions remain the same. 
C)  the interest portion decreases and the principal portion increases. 
D)  both the interest portion and the principal portion decrease. 
A)  the interest portion increases and the principal portion decreases. 
B)  the interest and principal portions remain the same. 
C)  the interest portion decreases and the principal portion increases. 
D)  both the interest portion and the principal portion decrease.

Question 11

A measure of a company's solvency is the

Accepted Answer

A)  inventory turnover ratio. 
B)  current ratio. 
C)  times interest earned ratio. 
D)  asset turnover ratio. 
A)  inventory turnover ratio. 
B)  current ratio. 
C)  times interest earned ratio. 
D)  asset turnover ratio.

Question 12

Unsecured notes are issued against the general credit of the borrower.

Accepted Answer

A) True 
 B)False

Question 13

Secured notes are often also referred to as mortgages.

Accepted Answer

A) True 
 B)False

Question 14

One example of a liability that is not a financial liability is

Accepted Answer

A)  notes payable. 
B)  unearned revenue. 
C)  bonds payable. 
D)  financial lease. 
A)  notes payable. 
B)  unearned revenue. 
C)  bonds payable. 
D)  financial lease.

Question 15

Last year, Hadley Bakery's income statement 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. 
A)  5.0 times. 
B)  6.4 times. 
C)  4.0 times. 
D)  4.6 times.

Question 16

On April 1, Aces Corporation borrows $160,000 from Rigor Bank by signing an 8-month, 3%, bank loan. Interest is due at maturity.InstructionsPrepare the entries listed below associated with the bank loan on the books of Aces Corporation. Its year end is June 30.
a. The entry on April 1 when the loan was received.
b. Any adjusting entries necessary on June 30. Assume no other interest accrual entries have been made.
c. The entry to record repayment of the loan at maturity.

Accepted Answer

The answer of On April 1, Aces Corporation borrows $160,000...

Question 17

With fixed principal payments, the interest ___ each period as the principal ___.

Accepted Answer

A)  decreases, decreases 
B)  increases, increases 
C)  increases, decreases 
D)  decreases, increases 
A)  decreases, decreases 
B)  increases, increases 
C)  increases, decreases 
D)  decreases, increases

Question 18

Detailed information such as a list showing the amounts of non-current debt that is scheduled to be paid off in each of the next five years should be disclosed in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Long-term notes may have

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.

Which of the following statements is false?

$2 million, 6%, 10-year bonds are issued when the market rate is 8%. Interest will be paid quarterly. When calculating the issue price of the bond, the interest rate to be used to calculate the present value of the face amount and the present value of the periodic interest payments is

When a long-term note payable with a fixed interest rate has fixed principal payments, it means that

Which of the following statements is true?

Instalments can be paid

The market interest rate is often called the

On December 31, 2018, Industrial Exporters issues a $365,000, 6%, 20-year mortgage. The terms require monthly payments of $2,615 (principal and interest - blended payment).InstructionsPrepare the journal entry for Jan 31, 2019 to record the first monthly payment. Include your calculations.

As blended principal and interest payments are made on a long-term loan,

A measure of a company's solvency is the

Unsecured notes are issued against the general credit of the borrower.

Secured notes are often also referred to as mortgages.

One example of a liability that is not a financial liability is

Last year, Hadley Bakery's income statement 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

With fixed principal payments, the interest _ each period as the principal _.

Detailed information such as a list showing the amounts of non-current debt that is scheduled to be paid off in each of the next five years should be disclosed in the notes to the financial statements.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters

Exam 10: Reporting and Analyzing Liabilities

Long-term notes may have

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.

Which of the following statements is false?

$2 million, 6%, 10-year bonds are issued when the market rate is 8%. Interest will be paid quarterly. When calculating the issue price of the bond, the interest rate to be used to calculate the present value of the face amount and the present value of the periodic interest payments is

When a long-term note payable with a fixed interest rate has fixed principal payments, it means that

Which of the following statements is true?

Instalments can be paid

The market interest rate is often called the

On December 31, 2018, Industrial Exporters issues a $365,000, 6%, 20-year mortgage. The terms require monthly payments of $2,615 (principal and interest - blended payment).InstructionsPrepare the journal entry for Jan 31, 2019 to record the first monthly payment. Include your calculations.

As blended principal and interest payments are made on a long-term loan,

A measure of a company's solvency is the

Unsecured notes are issued against the general credit of the borrower.

Secured notes are often also referred to as mortgages.

One example of a liability that is not a financial liability is

Last year, Hadley Bakery's income statement 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

With fixed principal payments, the interest ___ each period as the principal ___.

Detailed information such as a list showing the amounts of non-current debt that is scheduled to be paid off in each of the next five years should be disclosed in the notes to the financial statements.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters

With fixed principal payments, the interest _ each period as the principal _.