CH 14

If a company plans to retire long-term debt from a bond retirement fund, it should report the debt as current.

False

If the market rate is greater than the coupon rate, bonds will be sold at a premium

False

When a company enters into what is referred to as off-balance-sheet financing, the company is in violation of generally accepted accounting principles

False

Due to the complicated nature of bonds, bonds payable is required to be reported at fair value

False

Companies report bond discounts as a direct deduction from the face amount of the bond

True

Companies usually make bond interest payments semiannually, although the interest rate is generally expressed as an annual rate

True

Premium on bonds payable is

an adjunct account

The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the

bond indenture

Bond interest paid is equal to the

face amount of the bonds multiplied by the stated interest rate

The debt to assets ratio is computed by dividing

total liabilities by total assets