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Ch 14

39 Questions  I  By Jlyons08
ch 14

  
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Question Excerpt

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1.  An example of an item which is not a liability is
A.
B.
C.
D.
2.  The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the
A.
B.
C.
D.
3.  The term used for bonds that are unsecured as to principal is
A.
B.
C.
D.
4.  Bonds for which the owners' names are not registered with the issuing corporation are called
A.
B.
C.
D.
5.  Bonds that pay no interest unless the issuing company is profitable are called
A.
B.
C.
D.
6.  If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be
A.
B.
C.
D.
7.  The interest rate written in the terms of the bond indenture is known as the
A.
B.
C.
D.
8.  The rate of interest actually earned by bondholders is called the
A.
B.
C.
D.
9.  Use the following information for questions 29 and 30: Fox Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. One step in calculating the issue price of the bonds is to multiply the principal by the table value for
A.
B.
C.
D.
10.  Use the following information for questions 29 and 30:Fox Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%.Another step in calculating the issue price of the bonds is to
A.
B.
C.
D.
11.  Reich, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from date of issue. If the bonds were issued at a premium, this indicates that
A.
B.
C.
D.
12.  If bonds are initially sold at a discount and the straight-line method of amortization is used, interest expense in the earlier years will
A.
B.
C.
D.
13.  Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to
A.
B.
C.
D.
14.  When the effective-interest method is used to amortize bond premium or discount, the periodic amortization will
A.
B.
C.
D.
15.  If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a
A.
B.
C.
D.
16.  . When the interest payment dates of a bond are May 1 and November 1, and a bond issue is sold on June 1, the amount of cash received by the issuer will be
A.
B.
C.
D.
17.  Theoretically, the costs of issuing bonds could be
A.
B.
C.
D.
18.  The printing costs and legal fees associated with the issuance of bonds should
A.
B.
C.
D.
19.  Treasury bonds should be shown on the balance sheet as
A.
B.
C.
D.
20.  An early extinguishment of bonds payable, which were originally issued at a premium, is made by purchase of the bonds between interest dates. At the time of reacquisition
A.
B.
C.
D.
21.  The generally accepted method of accounting for gains or losses from the early extinguishment of debt treats any gain or loss as
A.
B.
C.
D.
22.  "In-substance defeasance" is a term used to refer to an arrangement whereby
A.
B.
C.
D.
23.   A corporation borrowed money from a bank to build a building. The long-term note signed by the corporation is secured by a mortgage that pledges title to the building as security for the loan. The corporation is to pay the bank $80,000 each year for 10 years to repay the loan. Which of the following relationships can you expect to apply to the situation?
A.
B.
C.
D.
24.  A debt instrument with no ready market is exchanged for property whose fair market value is currently indeterminable. When such a transaction takes place
A.
B.
C.
D.
25.  When a note payable is issued for property, goods, or services, the present value of the note is measured by
A.
B.
C.
D.
26.  When a note payable is exchanged for property, goods, or services, the stated interest rate is presumed to be fair unless
A.
B.
C.
D.
27.  Discount on Notes Payable is charged to interest expense
A.
B.
C.
D.
28.  Which of the following is an example of "off-balance-sheet financing"? 1. Non-consolidated subsidiary. 2. Special purpose entity. 3. Operating leases
A.
B.
C.
D.
29.  When a business enterprise enters into what is referred to as off-balance-sheet financing, the company
A.
B.
C.
D.
30.   Long-term debt that matures within one year and is to be converted into stock should be reported
A.
B.
C.
D.
31.  Which of the following must be disclosed relative to long-term debt maturities and sinking fund requirements?
A.
B.
C.
D.
32.  Note disclosures for long-term debt generally include all of the following except
A.
B.
C.
D.
33.  The times interest earned ratio is computed by dividing
A.
B.
C.
D.
34.  The debt to total assets ratio is computed by dividing
A.
B.
C.
D.
35.  In a troubled debt restructuring in which the debt is continued with modified terms and the carrying amount of the debt is less than the total future cash flows,
A.
B.
C.
D.
36.  A troubled debt restructuring will generally result in a
A.
B.
C.
D.
37.  In a troubled debt restructuring in which the debt is settled by a transfer of assets with a fair market value less than the carrying amount of the debt, the debtor would recognize
A.
B.
C.
D.
38.   In a troubled debt restructuring in which the debt is continued with modified terms, a gain should be recognized at the date of restructure, but no interest expense should be recognized over the remaining life of the debt, whenever the
A.
B.
C.
D.
39.  In a troubled debt restructuring in which the debt is continued with modified terms and the carrying amount of the debt is less than the total future cash flows, the creditor should
A.
B.
C.
D.
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