Question 1

Which of the following describes the term maturity date?

Accepted Answer

A) The date on which the debenture is cancelled 
B) The date on which the principal amount is repaid to the debenture holder 
C) The date on which each interest payment is made 
D) The date on which the debenture is issued 
A) The date on which the debenture is cancelled 
B) The date on which the principal amount is repaid to the debenture holder 
C) The date on which each interest payment is made 
D) The date on which the debenture is issued

Question 2

Once a debenture has been sold to a debenture holder,it may not be re-sold to other investors,but must be held by the first buyer until maturity.

Accepted Answer

A) True 
 B)False

Question 3

On 1 November 2016,Archangel Services issued $332,000 of 8-year debentures with a stated rate of 11% at par.The debentures make semiannual payments on 30 April and 31 October.At 31 December 2016,Archangel made an adjusting entry to accrue interest at year-end.How much Interest expense will be recorded at 31 December 2016? (Round to the nearest dollar. )

Accepted Answer

A) $6087 
B) $36,520 
C) $761 
D) $18,260 
A) $6087 
B) $36,520 
C) $761 
D) $18,260

Question 4

Blanding Company issues $1,176,000 of 16%,10-year debentures at 96 on 31 March 2017.The debentures pay interest on 31 March and 30 September.Assume that Blanding uses the straight-line method for amortisation.What net balance will be reported for the debentures on the balance sheet on 30 September 2017? (Round to the nearest dollar. )

Accepted Answer

A) $1,176,000 
B) $1,131,312 
C) $1,126,608 
D) $1,128,960 
A) $1,176,000 
B) $1,131,312 
C) $1,126,608 
D) $1,128,960

Question 5

Accounts payable is always shown on the balance sheet in current liabilities.

Accepted Answer

A) True 
 B)False

Question 6

The Australian Accounting Standards require that debenture premiums or discounts be amortised using the straight-line method.

Accepted Answer

A) True 
 B)False

Question 7

Debentures are non-current liabilities issued to multiple lenders,usually in increments of $1 000.

Accepted Answer

A) True 
 B)False

Question 8

The market rate is the rate used to calculate the actual cash payments made to debenture holders.

Accepted Answer

A) True 
 B)False

Question 9

The main reason companies redeem debentures prior to their maturity date is to relieve the pressure of paying interest payments.

Accepted Answer

A) True 
 B)False

Question 10

If a debenture's stated interest rate is the same as the market rate,which of the following is TRUE?

Accepted Answer

A) The debenture will be issued at a discount. 
B) The debenture will be issued at a premium. 
C) The debenture will be issued at par. 
D) The debenture will be issued for an amount lower than the maturity value. 
A) The debenture will be issued at a discount. 
B) The debenture will be issued at a premium. 
C) The debenture will be issued at par. 
D) The debenture will be issued for an amount lower than the maturity value.

Question 11

Premium on debentures payable is considered to be additional interest expense of the company that issues the debenture.

Accepted Answer

A) True 
 B)False

Question 12

The time value of money is related to which of the following concepts?

Accepted Answer

A) Money loses value over time as it is spent. 
B) Money loses its purchasing power because of inflation. 
C) Money earns interest over time and grows in value. 
D) Money can buy extra time. 
A) Money loses value over time as it is spent. 
B) Money loses its purchasing power because of inflation. 
C) Money earns interest over time and grows in value. 
D) Money can buy extra time.

Question 13

Interest payable would normally be shown on the balance sheet in current liabilities.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is the amount the borrower must pay back to the debenture holders?

Accepted Answer

A) Present value 
B) Principal amount 
C) Market value 
D) Stated interest value 
A) Present value 
B) Principal amount 
C) Market value 
D) Stated interest value

Question 15

Which of the following statements is TRUE about a debenture that is issued at a premium?

Accepted Answer

A) Its interest rate is lower than the prevailing market rate. 
B) It will repay principal at more than the face value. 
C) It will be sold at par. 
D) It will be sold above par. 
A) Its interest rate is lower than the prevailing market rate. 
B) It will repay principal at more than the face value. 
C) It will be sold at par. 
D) It will be sold above par.

Question 16

On 1 January 2017,Bratios Company purchases equipment and signs a 6-year mortgage payable for $80,000 at 15%.The mortgage will be paid in equal annual instalments of $21,139,beginning 1 January 2018.Calculate the portion of interest expense paid on the third instalment.(Round to the nearest dollar. )

Accepted Answer

A) $21,139 
B) $70,861 
C) $9053 
D) $12,000 
A) $21,139 
B) $70,861 
C) $9053 
D) $12,000

Question 17

The current portion of notes payable must be reported on the balance sheet combined with the long-term portion under non-current liabilities.

Accepted Answer

A) True 
 B)False

Question 18

On 1 January 2017,Bratios Company purchased equipment and signed a 6-year mortgage payable for $160,000 at 15%.The mortgage will be paid in equal annual instalments of $42,278,beginning 1 January 2018.The journal entry to record the first instalment payment on 1 January 2018 will include a:

Accepted Answer

A) credit to Mortgage payable for $160,000. 
B) debit to Interest expense for $24,000. 
C) debit to Mortgage payable for $42,278. 
D) credit to Cash for $18,278. 
A) credit to Mortgage payable for $160,000. 
B) debit to Interest expense for $24,000. 
C) debit to Mortgage payable for $42,278. 
D) credit to Cash for $18,278.

Question 19

On 1 March 2017,Vinnie Services issued a 9% long-term note payable for $21,000.It is payable over a 3-year term in $7000 principal instalments on 1 March of each year,beginning 1 March 2018.Which of the following entries needs to be made at 1 March 2017?

Accepted Answer

A)  $$\begin{array} { | c | l | l | } 
\hline \text { Long-term note payable } & \$ 7000 & \
\hline \text { Cash } & & 7000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | l | } 
\hline \text { Long-term note payable } & \$ 21,000 & \
\hline \text { Accounts payable } & & 21,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | l | l | } 
\hline \text { Cash } & \$ 21,000 & \
\hline \text { Long-term note payable } & & 21,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | l | } 
\hline \text { Current portion of long-term note payable } & \$ 21,000 & \
\hline \text { Long-term note payable } & & 21,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | l | l | } 
\hline \text { Long-term note payable } & \$ 7000 & \
\hline \text { Cash } & & 7000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | l | } 
\hline \text { Long-term note payable } & \$ 21,000 & \
\hline \text { Accounts payable } & & 21,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | l | l | } 
\hline \text { Cash } & \$ 21,000 & \
\hline \text { Long-term note payable } & & 21,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | l | } 
\hline \text { Current portion of long-term note payable } & \$ 21,000 & \
\hline \text { Long-term note payable } & & 21,000 \
\hline
\end{array}$$

Question 20

The current portion of notes payable is the principal amount that will be paid within one year of the balance sheet date.

Accepted Answer

A) True 
 B)False

Which of the following describes the term maturity date?

Once a debenture has been sold to a debenture holder,it may not be re-sold to other investors,but must be held by the first buyer until maturity.

Accounts payable is always shown on the balance sheet in current liabilities.

The Australian Accounting Standards require that debenture premiums or discounts be amortised using the straight-line method.

Debentures are non-current liabilities issued to multiple lenders,usually in increments of $1 000.

The market rate is the rate used to calculate the actual cash payments made to debenture holders.

The main reason companies redeem debentures prior to their maturity date is to relieve the pressure of paying interest payments.

If a debenture's stated interest rate is the same as the market rate,which of the following is TRUE?

Premium on debentures payable is considered to be additional interest expense of the company that issues the debenture.

The time value of money is related to which of the following concepts?

Interest payable would normally be shown on the balance sheet in current liabilities.

Which of the following is the amount the borrower must pay back to the debenture holders?

Which of the following statements is TRUE about a debenture that is issued at a premium?

The current portion of notes payable must be reported on the balance sheet combined with the long-term portion under non-current liabilities.

On 1 January 2017,Bratios Company purchased equipment and signed a 6-year mortgage payable for $160,000 at 15%.The mortgage will be paid in equal annual instalments of $42,278,beginning 1 January 2018.The journal entry to record the first instalment payment on 1 January 2018 will include a:

On 1 March 2017,Vinnie Services issued a 9% long-term note payable for $21,000.It is payable over a 3-year term in $7000 principal instalments on 1 March of each year,beginning 1 March 2018.Which of the following entries needs to be made at 1 March 2017?

The current portion of notes payable is the principal amount that will be paid within one year of the balance sheet date.

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

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Exam 12: Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Which of the following describes the term maturity date?

Once a debenture has been sold to a debenture holder,it may not be re-sold to other investors,but must be held by the first buyer until maturity.

Accounts payable is always shown on the balance sheet in current liabilities.

The Australian Accounting Standards require that debenture premiums or discounts be amortised using the straight-line method.

Debentures are non-current liabilities issued to multiple lenders,usually in increments of $1 000.

The market rate is the rate used to calculate the actual cash payments made to debenture holders.

The main reason companies redeem debentures prior to their maturity date is to relieve the pressure of paying interest payments.

If a debenture's stated interest rate is the same as the market rate,which of the following is TRUE?

Premium on debentures payable is considered to be additional interest expense of the company that issues the debenture.

The time value of money is related to which of the following concepts?

Interest payable would normally be shown on the balance sheet in current liabilities.

Which of the following is the amount the borrower must pay back to the debenture holders?

Which of the following statements is TRUE about a debenture that is issued at a premium?

The current portion of notes payable must be reported on the balance sheet combined with the long-term portion under non-current liabilities.

On 1 January 2017,Bratios Company purchased equipment and signed a 6-year mortgage payable for $160,000 at 15%.The mortgage will be paid in equal annual instalments of $42,278,beginning 1 January 2018.The journal entry to record the first instalment payment on 1 January 2018 will include a:

On 1 March 2017,Vinnie Services issued a 9% long-term note payable for $21,000.It is payable over a 3-year term in $7000 principal instalments on 1 March of each year,beginning 1 March 2018.Which of the following entries needs to be made at 1 March 2017?

The current portion of notes payable is the principal amount that will be paid within one year of the balance sheet date.

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Filters