Accounting Chapter 9 practice quizzes

If bonds were initially issued at a discount, the crying value of the bonds on the issuer's books will A) Increase as the bonds approach their maturity date B) Remain constant throughout the bonds' life C) Fluctuate throughout the bonds' life D) Decrease at the bonds approach their maturity date

A

Which of the following would describe a callable bond? A) Borrower has the right to pay off the bonds prior to the due date B) Borrower has the right to issue more bonds prior to the due date of existing bonds C) Investor has the right to call off the interest payments on the bonds D) Borrower has the right to call off the interest payments on the bonds

A

When will bonds sell at a premium? A) The state rate of interest is more than the market rate at the time of the issue B) The credit standing of the issuing company is better than other companies in a similar line of business C) The issuing company will be able to retire the bonds at more than face at maturity D) The stated rate of interest is less than the market rate of interest at the time of issue

A (more than)

The Kaplan group sold $200,000 of 10 year bonds for $190,000. The rate on the face of the bonds was 8% and interest is payable annually on December 1st. What entry would be made on December 1st when the interest is paid? A) Debit interest expense and scout on bonds payable; credit cash B) Debit interest expense; credit cash and discount on bonds payable C) Debit interest expense; credit bonds payable and cash D) Debit interest expense; credit cash

B

A graphics deign company issued bonds in the same amount of $1,000,000 with a stated interest rate of 8%. If the interest is paid semiannually and the bonds are due in 10 years, what is the total amount of interest that would be paid over the life of the bonds? A) $1,000,000 B) $80,000 C) $800,000 D) $400,000

C

If bonds were initially issued at a discount, the carrying value of the bonds on the issuer's books will A) Fluctuate throughout the bonds' life B) Decrease as the bonds approach their maturity date C) Remain constant throughout the bonds life D) Increase as the bonds approach their maturity date

D

Long-term debt generally includes A) Accounts payable, because they are interest bearing B) Obligations that will be satisfied within one year C) Accrued expenses D) Obligations that extend beyond one year

D

Which of the following lease conditions would result in a capital lease to the lessee? A) The fair market value of the property at the inception of the lease is $20,000; the greatest value of the lease payments is $17,600 B) The lease term is 70% of the property's economic life C) The lessee will return the property to the lessor at the end of the term D) Thee lessee can purchase the property for $1 at the end of the lease term

D

When will bonds sell at a discount? A) The issuing company will be able to retire the bonds at less than face at maturity B) The credit standing of the issuing company is not as good as other companies in a similar line of business C) The state rate of interest is more than the market rate at the time of the issue D) The stated rate of interest is less than the market rate of interest at the time of issue

D (less than)