Accounting Exam 3

How does simple interest differ from compound interest?

Simple interest includes interest earned on the initial investment only.

The interest rate quoted in a bond contract is called the

Stated interest rate

1. Which of the following is true for a bond sold at premium?

a. Both carrying value and annual interest expense decrease each period

1. The present value of a single amount to be received in the future will be:

a. Lower when using a higher discount rate

When a bond is issued at a discount

a. the market rate is higher than the stated rate.

A series of equal periodic payments is referred to as: a.The time value of money b.An annuity c.The future value d.Interest

b. An annuity

Which of the following is NOT a liability? a.Notes payable b.Deferred revenue c.Accumulated Depreciation d.Accounts payable

c. Accumulated Depreciation

Which one of the following statements about the book value of property, plant, and equipment assets is true? a.Book value equals the original cost less accumulated depreciation for these assets .b.Book value always equals fair or market value of these assets. c.Book value equals the original cost less depreciation expense during the current year for these assets. d.Book value equals the original cost less the residual value for these assets.

a - Book value equals the original cost less accumulated depreciation for these assets

Which of the following typically refers to the process of allocating the cost of long-term intangible assets used in the business over future periods?

Amortization

1. Which of the following are intangible assets? a. Goodwill b. Patents c. Copyrights d. All of these are intangible assets

All of them

Which of the following describes monthly installment payments of a note payable(such as a car loan)?

The monthly payments equal interest expense plus the reduction of the note's carrying value.

Which of the following definitions describes the term Amortization? a.Allocating an asset's cost based on its use b.The process of recording expense for natural resources c.Allocating the cost of a tangible asset over its service life d.Allocating the cost of an intangible asset over its service life

d. Allocating the cost of an intangible asset over its service life

Magazines R Us (MRU) requires customers to pay for a 12-month subscription in advance of MRU delivering any magazines to the customers. These customer payments in advance of magazine delivery represent a. Revenue because cash has been received b.Accounts receivable until the magazines are delivered c.Long-term debt until the magazines are delivered d.Deferred Revenue until the magazines are delivered

d.Deferred Revenue until the magazines are delivered