Accounting Exam 3

Which of the following leases is essentially the purchase of an asset with debt financing?

A capital lease

The advantages of obtaining long-term funds by issuing bonds, rather than issuing additional common stock, include which of the following?

Interest payments are tax deductible to the company, while dividends are not. Also, expansion is achieved without surrendering ownership control.

Which of the following is not a liability?

An unused line of credit.

Gains on the sale of long-term assets for cash:

Are the excess of the cash received over the book value.

Which of the following is not an employer payroll cost?

Federal and state income taxes.

Which of the following is not withheld from an employee's salary?

Federal and state unemployment taxes.

Which one of the following regarding the book value of an asset is correct?

It reflects the original cost of the asset less accumulated depreciation.

In each succeeding payment on an installment note:

The amount of interest expense decreases.