The Following Key Terms from Chapter 6 Relate to Accounting

Short Answer

The following key terms from Chapter 6 relate to accounting for general long-term liabilities and debt service:
A.Legal defeasance
B.Regular serial bonds
C.In-substance defeasance
D.Irregular serial bonds
E.Debt limit
F.Annuity serial bonds
G.Debt margin
For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition.
_____ 1.A transaction in which cash or other assets are placed into an irrevocable trust for the benefit of debt holders
_____ 2. Bonds for which the amount of annual principal repayments is scheduled to increase each year by approximately the same amount that interest payments decrease
_____ 3. Bonds payable in which the total principal is repayable in a specified number of equal annual installments
_____ 4. The maximum amount of gross or net debt that is legally permitted
_____ 5. A transaction in which debt is legally satisfied based on certain provisions in the debt instrument even though the debt has not been repaid