Question 1

Debentures are bonds that are backed only by the general credit of the company issuing the bond.

Accepted Answer

A) True 
 B)False

Question 2

Which are generally paid at an hourly rate?

Accepted Answer

A) Salaries 
B) Wages 
C) Bonuses 
D) Commissions 
A) Salaries 
B) Wages 
C) Bonuses 
D) Commissions

Question 3

The interest coverage ratio equals interest expense divided by EBIT.

Accepted Answer

A) True 
 B)False

Question 4

The journal entry to record $400,000 of bonds that were issued at 107 would be to:

Accepted Answer

A) debit Cash, $400,000; credit Bonds payable, $400,000. 
B) debit Cash, $428,000; credit Bonds payable, $428,000. 
C) debit Cash, $428,000; credit Bonds payable, $400,000; credit Premium on bonds payable, $28,000. 
D) debit Cash, $400,000; debit Discount on bonds payable, $28,000; credit Bonds payable, $428,000. 
A) debit Cash, $400,000; credit Bonds payable, $400,000. 
B) debit Cash, $428,000; credit Bonds payable, $428,000. 
C) debit Cash, $428,000; credit Bonds payable, $400,000; credit Premium on bonds payable, $28,000. 
D) debit Cash, $400,000; debit Discount on bonds payable, $28,000; credit Bonds payable, $428,000.

Question 5

Bonds that mature all at the same time are:

Accepted Answer

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

Question 6

The debt ratio is an indicator of a company's ability to incur more debt.

Accepted Answer

A) True 
 B)False

Question 7

On August 15, 2016, Sassycat Designs signed a $30,000 8% 15-year installment note which requires annual payments of $2,000 plus interest. Sassycat will classify this loan on the December 31, 2016 Balance Sheet as $2,000 current portion of long-term debt and $30,000 long-term debt.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is NOT a requirement of a capital lease?

Accepted Answer

A) Ownership does not transfer at lease end. 
B) The agreement has a bargain purchase option. 
C) The lease must cover at least 75% of asset's useful life. 
D) The present value of lease payments must be 90% or more of market value of asset. 
A) Ownership does not transfer at lease end. 
B) The agreement has a bargain purchase option. 
C) The lease must cover at least 75% of asset's useful life. 
D) The present value of lease payments must be 90% or more of market value of asset.

Question 9

When a company issues bonds, what are they doing?

Accepted Answer

A) The company is loaning money to third parties. 
B) The company is borrowing money from third parties. 
C) The company is selling part of itself. 
D) The company is guaranteeing the products they sell. 
A) The company is loaning money to third parties. 
B) The company is borrowing money from third parties. 
C) The company is selling part of itself. 
D) The company is guaranteeing the products they sell.

Question 10

A company will want a lower interest coverage ratio if it is unsure of its EBIT.

Accepted Answer

A) True 
 B)False

Question 11

A company that cosigns on a loan for another company could incur a contingent liability.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following would NOT be a required payroll deduction for an employee?

Accepted Answer

A) FICA 
B) 401(K)retirement 
C) Federal income tax 
D) State income tax 
A) FICA 
B) 401(K)retirement 
C) Federal income tax 
D) State income tax

Question 13

A known obligation of an unknown amount is a(n):

Accepted Answer

A) contingent liability. 
B) estimated liability. 
C) known liability. 
D) accrued liability. 
A) contingent liability. 
B) estimated liability. 
C) known liability. 
D) accrued liability.

Question 14

Sales tax liabilities are classified as long-term payables.

Accepted Answer

A) True 
 B)False

Question 15

Bonds from the same bond issue that mature at different times are called:

Accepted Answer

A) unsecured bonds. 
B) term bonds. 
C) convertible bonds. 
D) serial bonds. 
A) unsecured bonds. 
B) term bonds. 
C) convertible bonds. 
D) serial bonds.

Question 16

The journal entry to record $230,000 of bonds that were issued at 98 would be to:

Accepted Answer

A) debit Cash, $225,400; debit Discount on bonds payable, $4,600; credit Bonds payable, $230,000. 
B) debit Cash, $225,400; credit Bonds payable, $225,400. 
C) debit Cash, $230,000; credit Bonds payable, $225,400; credit Premium on bonds payable, $4,600. 
D) debit Cash, $230,000; credit Bonds payable, $230,000. 
A) debit Cash, $225,400; debit Discount on bonds payable, $4,600; credit Bonds payable, $230,000. 
B) debit Cash, $225,400; credit Bonds payable, $225,400. 
C) debit Cash, $230,000; credit Bonds payable, $225,400; credit Premium on bonds payable, $4,600. 
D) debit Cash, $230,000; credit Bonds payable, $230,000.

Question 17

TNT Construction had cash sales for the month of June totaling $44,000. TNT offers a 1-year warranty on its construction services. If TNT estimates warranty claims will equal 5% of sales, the journal entry to record the estimated warranty expense for the month is:

Accepted Answer

A) debit Warranty expense, $2,200; credit Cash, $2,200. 
B) debit Estimated warranty payable, $2,200; credit Warranty expense, $2,200. 
C) debit Warranty expense, $2,200; credit Estimated warranty payable, $2,200. 
D) debit Warranty expense, $2,200; credit Sales revenue, $2,200. 
A) debit Warranty expense, $2,200; credit Cash, $2,200. 
B) debit Estimated warranty payable, $2,200; credit Warranty expense, $2,200. 
C) debit Warranty expense, $2,200; credit Estimated warranty payable, $2,200. 
D) debit Warranty expense, $2,200; credit Sales revenue, $2,200.

Question 18

Even liabilities of unknown amounts are required to be placed on the Balance Sheet.

Accepted Answer

A) True 
 B)False

Question 19

If the market rate of interest is higher than the stated rate of interest, then investors will be willing to pay more and the bond is sold at a premium.

Accepted Answer

A) True 
 B)False

Question 20

A $170,000 bond issue sold at 97 will cost: (Round your final answer to the nearest dollar.)

Accepted Answer

A) whatever cost is negotiated. 
B) $170,000 
C) $175,258 
D) $164,900 
A) whatever cost is negotiated. 
B) $170,000 
C) $175,258 
D) $164,900

Debentures are bonds that are backed only by the general credit of the company issuing the bond.

Which are generally paid at an hourly rate?

The interest coverage ratio equals interest expense divided by EBIT.

The journal entry to record $400,000 of bonds that were issued at 107 would be to:

Bonds that mature all at the same time are:

The debt ratio is an indicator of a company's ability to incur more debt.

On August 15, 2016, Sassycat Designs signed a $30,000 8% 15-year installment note which requires annual payments of $2,000 plus interest. Sassycat will classify this loan on the December 31, 2016 Balance Sheet as $2,000 current portion of long-term debt and $30,000 long-term debt.

Which of the following is NOT a requirement of a capital lease?

When a company issues bonds, what are they doing?

A company will want a lower interest coverage ratio if it is unsure of its EBIT.

A company that cosigns on a loan for another company could incur a contingent liability.

Which of the following would NOT be a required payroll deduction for an employee?

A known obligation of an unknown amount is a(n):

Sales tax liabilities are classified as long-term payables.

Bonds from the same bond issue that mature at different times are called:

The journal entry to record $230,000 of bonds that were issued at 98 would be to:

TNT Construction had cash sales for the month of June totaling $44,000. TNT offers a 1-year warranty on its construction services. If TNT estimates warranty claims will equal 5% of sales, the journal entry to record the estimated warranty expense for the month is:

Even liabilities of unknown amounts are required to be placed on the Balance Sheet.

If the market rate of interest is higher than the stated rate of interest, then investors will be willing to pay more and the bond is sold at a premium.

A $170,000 bond issue sold at 97 will cost: (Round your final answer to the nearest dollar.)

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 9: Current Liabilities and Long-Term Debt

Debentures are bonds that are backed only by the general credit of the company issuing the bond.

Which are generally paid at an hourly rate?

The interest coverage ratio equals interest expense divided by EBIT.

The journal entry to record $400,000 of bonds that were issued at 107 would be to:

Bonds that mature all at the same time are:

The debt ratio is an indicator of a company's ability to incur more debt.

On August 15, 2016, Sassycat Designs signed a $30,000 8% 15-year installment note which requires annual payments of $2,000 plus interest. Sassycat will classify this loan on the December 31, 2016 Balance Sheet as $2,000 current portion of long-term debt and $30,000 long-term debt.

Which of the following is NOT a requirement of a capital lease?

When a company issues bonds, what are they doing?

A company will want a lower interest coverage ratio if it is unsure of its EBIT.

A company that cosigns on a loan for another company could incur a contingent liability.

Which of the following would NOT be a required payroll deduction for an employee?

A known obligation of an unknown amount is a(n):

Sales tax liabilities are classified as long-term payables.

Bonds from the same bond issue that mature at different times are called:

The journal entry to record $230,000 of bonds that were issued at 98 would be to:

TNT Construction had cash sales for the month of June totaling $44,000. TNT offers a 1-year warranty on its construction services. If TNT estimates warranty claims will equal 5% of sales, the journal entry to record the estimated warranty expense for the month is:

Even liabilities of unknown amounts are required to be placed on the Balance Sheet.

If the market rate of interest is higher than the stated rate of interest, then investors will be willing to pay more and the bond is sold at a premium.

A $170,000 bond issue sold at 97 will cost: (Round your final answer to the nearest dollar.)

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

Filters