Chapter 10 quiz

a legal document that indicates the name of the issuer, the face value of the bond and such other data is called

a bond certificate

if the market interest rate for a bond is higher than the stated interest rate, the bond will sell at

a discount

the interest expense recorded on an interest payment date is increased

by the amortization of discount on bonds payable

which of the following is not a current liability on December 31, 2016

A lawsuit judgment to be decided on January 10, 2017

Interest expense on an interest-bearing note is

accrued over the life of the note

the current portion of long-term debt should

be reclassified as a current liability

Sales taxes collected by a retailer are recorded by

crediting Sales Taxes Payable

the journal entry to record the issuance of bonds at a discount will include a

debit to cash for the face amount of the bonds minus the amount of the discount

Over the term of the bonds, the balance in the discount on bonds payable account will

decrease

Which of the following would most likely be classified as a current liability

dividends payable

liabilities are classified as current or long-term based on their

due date

if the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount

greater than face value

an interest is recorded on an interest-bearing note, the Interest Expense account is

increased; the Interest Payable account is increased

if bonds are issued at a discount, it mean that the

market interest rate is higher than the contractual interest rate

unearned Rental Revenue is

reported as a current liability

a retailer that collects sales taxes is acting as an agent for the

taxing authority

bond discount should be amortized to comply with

the matching principle

stockholders of a company may be reluctant to finance expansion through issuing more equity because

their earnings per share may decrease

the sale of bonds above face value

will cause the total cost of borrowing to be less than the bond interest paid

a current liability is a debt that can reasonably be expected to be paid

within one year, or the operating cycle, whichever is longer