Question 1

A $25,000 bond issue with a stated interest rate of 5%,when the market rate of interest is 4%,means that the bond will sell for:

Accepted Answer

A) $25,000. 
B) more than $25,000. 
C) less than $25,000. 
D) $35,000. 
A) $25,000. 
B) more than $25,000. 
C) less than $25,000. 
D) $35,000.

Question 2

The combined FICA rate for employees is:

Accepted Answer

A) 7)65%. 
B) 1)45%. 
C) 6)20%. 
D) 0)80%. 
A) 7)65%. 
B) 1)45%. 
C) 6)20%. 
D) 0)80%.

Question 3

An obligation dependent upon an event that has not yet occurred is an example of 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 4

State sales tax collected by a company is generally paid to the state at the end of the year.

Accepted Answer

A) True 
 B)False

Question 5

Marla Smith,an employee of Clown College,earned $105,000 prior to December.Smith's salary for December is $10,000.For what amount will Smith's December salary be subject to OASDI tax and HI tax,respectively.

Accepted Answer

A) OASDI $8,700;HI $8,700 
B) OASDI $8,700;HI $10,000 
C) OASDI $10,000;HI $8,700 
D) OASDI $10,000;HI $10,000 
A) OASDI $8,700;HI $8,700 
B) OASDI $8,700;HI $10,000 
C) OASDI $10,000;HI $8,700 
D) OASDI $10,000;HI $10,000

Question 6

Bonds that can be exchanged for stock are called:

Accepted Answer

A) callable bonds. 
B) serial bonds. 
C) debenture bonds. 
D) convertible bonds. 
A) callable bonds. 
B) serial bonds. 
C) debenture bonds. 
D) convertible bonds.

Question 7

What is the purpose of a bond discount?

Accepted Answer

A) It raises the bond interest rate to the market interest rate at the time the bond was issued. 
B) It decreases the bond interest rate to the market interest rate at the time the bond was issued. 
C) It increases the periodic cash interest payments paid to those who purchased the bond. 
D) It decreases the periodic cash interest payments paid to those who purchased the bond. 
A) It raises the bond interest rate to the market interest rate at the time the bond was issued. 
B) It decreases the bond interest rate to the market interest rate at the time the bond was issued. 
C) It increases the periodic cash interest payments paid to those who purchased the bond. 
D) It decreases the periodic cash interest payments paid to those who purchased the bond.

Question 8

A debt ratio of 0.50 (50%)would mean that half of a company's assets would need to be sold to pay off all of its current liabilities.

Accepted Answer

A) True 
 B)False

Question 9

The rate of interest that investors are willing to receive for similar bonds of equal risk at the current time is the ________ rate of interest.

Accepted Answer

A) stated 
B) market 
C) variable 
D) maturity 
A) stated 
B) market 
C) variable 
D) maturity

Question 10

Dante's Designs has current assets of $56,000;long-term assets of $135,000;current liabilities of $44,000;and long-term liabilities of $90,000.Dante's debt ratio is:

Accepted Answer

A) 127.3%. 
B) 78.6%. 
C) 239.3%. 
D) 70.2%. 
A) 127.3%. 
B) 78.6%. 
C) 239.3%. 
D) 70.2%.

Question 11

Contingent liabilities pose an ethical challenge because they're based on past events,they are easier to manipulate.

Accepted Answer

A) True 
 B)False

Question 12

A liability,such as warranties payable,would be an example of 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 13

Evergreen Roofing had cash sales for the month totaling $33,500.Evergreen offers a 1-year warranty on its roofing services.If Evergreen estimates warranty claims will equal 3% of sales,the journal entry to record the estimated warranty expense for the month is:

Accepted Answer

A) debit warranty expense $1,005;credit Cash $1,005. 
B) debit estimated warranty expense $1,005;credit warranty payable $1,005. 
C) debit warranty expense $1,005;credit Sales Revenue $1,005. 
D) debit warranty expense $1,005;credit Estimated Warranty Payable $1,005. 
A) debit warranty expense $1,005;credit Cash $1,005. 
B) debit estimated warranty expense $1,005;credit warranty payable $1,005. 
C) debit warranty expense $1,005;credit Sales Revenue $1,005. 
D) debit warranty expense $1,005;credit Estimated Warranty Payable $1,005.

Question 14

A company's ability to pay the interest on its debt is often measured with the interest coverage ratio.

Accepted Answer

A) True 
 B)False

Question 15

The journal entry to record $200,000 of bonds that were issued at 104 would be to:

Accepted Answer

A) debit Cash,$200,000;credit Bonds payable,$200,000. 
B) debit Cash,$208,000;credit Bonds payable,$208,000. 
C) debit Cash,$208,000;credit Bonds payable,$200,000;credit Premium on bonds payable,$8,000. 
D) debit Cash,$200,000;debit Discount on bonds payable,$8,000;credit Bonds payable,$208,000. 
A) debit Cash,$200,000;credit Bonds payable,$200,000. 
B) debit Cash,$208,000;credit Bonds payable,$208,000. 
C) debit Cash,$208,000;credit Bonds payable,$200,000;credit Premium on bonds payable,$8,000. 
D) debit Cash,$200,000;debit Discount on bonds payable,$8,000;credit Bonds payable,$208,000.

Question 16

If the likelihood of an obligation is remote:

Accepted Answer

A) no action is necessary in the accounting treatment. 
B) the disclosure with explanation is put into the financial statement footnotes. 
C) the obligation with the estimated dollars is recorded on the Balance Sheet. 
D) the obligation with the estimated dollars is recorded and put into the footnotes. 
A) no action is necessary in the accounting treatment. 
B) the disclosure with explanation is put into the financial statement footnotes. 
C) the obligation with the estimated dollars is recorded on the Balance Sheet. 
D) the obligation with the estimated dollars is recorded and put into the footnotes.

Question 17

A $150,000 bond issue sold at 93.8 will cost:

Accepted Answer

A) whatever cost is negotiated. 
B) $150,000. 
C) $159,300. 
D) $140,700. 
A) whatever cost is negotiated. 
B) $150,000. 
C) $159,300. 
D) $140,700.

Question 18

On January 1,Greene Autos signed a $210,000,6%,30-year mortgage that requires semiannual payments of $7,585 on June 30 and December 31 of each year.The journal entry to record the first semiannual payment would be (round interest calculation to the nearest dollar)to:

Accepted Answer

A) debit Mortgage Payable,$7,585;credit Cash,$7,585. 
B) debit Interest Expense,$1,285;debit Mortgage Payable,$6,300;credit Cash,$7,585. 
C) debit Interest Expense,$6,300;debit Mortgage expense,$1,285;credit Cash,$7,585. 
D) debit Interest Expense,$6,300;debit Mortgage Payable,$1,285;credit Cash,$7,585. 
A) debit Mortgage Payable,$7,585;credit Cash,$7,585. 
B) debit Interest Expense,$1,285;debit Mortgage Payable,$6,300;credit Cash,$7,585. 
C) debit Interest Expense,$6,300;debit Mortgage expense,$1,285;credit Cash,$7,585. 
D) debit Interest Expense,$6,300;debit Mortgage Payable,$1,285;credit Cash,$7,585.

Question 19

Leases that are treated as financed purchases are called:

Accepted Answer

A) capital leases. 
B) operating leases. 
C) expense leases. 
D) revenue leases. 
A) capital leases. 
B) operating leases. 
C) expense leases. 
D) revenue leases.

Question 20

The accounting treatment of a contingent liability depends upon the likelihood of an actual obligation occurring.

Accepted Answer

A) True 
 B)False

A $25,000 bond issue with a stated interest rate of 5%,when the market rate of interest is 4%,means that the bond will sell for:

The combined FICA rate for employees is:

An obligation dependent upon an event that has not yet occurred is an example of a(n):

State sales tax collected by a company is generally paid to the state at the end of the year.

Marla Smith,an employee of Clown College,earned $105,000 prior to December.Smith's salary for December is $10,000.For what amount will Smith's December salary be subject to OASDI tax and HI tax,respectively.

Bonds that can be exchanged for stock are called:

What is the purpose of a bond discount?

A debt ratio of 0.50 (50%)would mean that half of a company's assets would need to be sold to pay off all of its current liabilities.

The rate of interest that investors are willing to receive for similar bonds of equal risk at the current time is the ________ rate of interest.

Dante's Designs has current assets of $56,000;long-term assets of $135,000;current liabilities of $44,000;and long-term liabilities of $90,000.Dante's debt ratio is:

Contingent liabilities pose an ethical challenge because they're based on past events,they are easier to manipulate.

A liability,such as warranties payable,would be an example of a(n):

Evergreen Roofing had cash sales for the month totaling $33,500.Evergreen offers a 1-year warranty on its roofing services.If Evergreen estimates warranty claims will equal 3% of sales,the journal entry to record the estimated warranty expense for the month is:

A company's ability to pay the interest on its debt is often measured with the interest coverage ratio.

The journal entry to record $200,000 of bonds that were issued at 104 would be to:

If the likelihood of an obligation is remote:

A $150,000 bond issue sold at 93.8 will cost:

On January 1,Greene Autos signed a $210,000,6%,30-year mortgage that requires semiannual payments of $7,585 on June 30 and December 31 of each year.The journal entry to record the first semiannual payment would be (round interest calculation to the nearest dollar)to:

Leases that are treated as financed purchases are called:

The accounting treatment of a contingent liability depends upon the likelihood of an actual obligation occurring.

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

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Exam 9: Current Liabilities and Long-Term Debt

A $25,000 bond issue with a stated interest rate of 5%,when the market rate of interest is 4%,means that the bond will sell for:

The combined FICA rate for employees is:

An obligation dependent upon an event that has not yet occurred is an example of a(n):

State sales tax collected by a company is generally paid to the state at the end of the year.

Marla Smith,an employee of Clown College,earned $105,000 prior to December.Smith's salary for December is $10,000.For what amount will Smith's December salary be subject to OASDI tax and HI tax,respectively.

Bonds that can be exchanged for stock are called:

What is the purpose of a bond discount?

A debt ratio of 0.50 (50%)would mean that half of a company's assets would need to be sold to pay off all of its current liabilities.

The rate of interest that investors are willing to receive for similar bonds of equal risk at the current time is the ________ rate of interest.

Dante's Designs has current assets of $56,000;long-term assets of $135,000;current liabilities of $44,000;and long-term liabilities of $90,000.Dante's debt ratio is:

Contingent liabilities pose an ethical challenge because they're based on past events,they are easier to manipulate.

A liability,such as warranties payable,would be an example of a(n):

Evergreen Roofing had cash sales for the month totaling $33,500.Evergreen offers a 1-year warranty on its roofing services.If Evergreen estimates warranty claims will equal 3% of sales,the journal entry to record the estimated warranty expense for the month is:

A company's ability to pay the interest on its debt is often measured with the interest coverage ratio.

The journal entry to record $200,000 of bonds that were issued at 104 would be to:

If the likelihood of an obligation is remote:

A $150,000 bond issue sold at 93.8 will cost:

On January 1,Greene Autos signed a $210,000,6%,30-year mortgage that requires semiannual payments of $7,585 on June 30 and December 31 of each year.The journal entry to record the first semiannual payment would be (round interest calculation to the nearest dollar)to:

Leases that are treated as financed purchases are called:

The accounting treatment of a contingent liability depends upon the likelihood of an actual obligation occurring.

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