Accounting Exam 3 (CH 7 & 9)

debit Interest Expense and credit Cash.

. Mission Furniture issued $500,000 in bonds payable at par. The journal entry to record a semiannual interest payment on these bonds would

adds to an asset

A capital expenditure

Estimated residual value

Acton Inc., uses the​ double-declining-balance method for depreciation on its computers. Which item is not needed to compute depreciation for the first​ year?

increases the recorded amount of interest expense.

Amortizing the discount on bonds payable

$513,600 in the financing activities section.

Bonds with a face value of $480,000 are issued at 107. The statement of cash flows would report a cash inflow​ of:

premium

Bonds with an 8% stated interest rate were issued when the market rate of interest was 5%. This bond was issued at

asset

Capitalizing a cost involves increasing what type of account?

asset

Capitalizing a cost involves increasing what type of​ account

convertible bonds

Corporate bonds that can be exchanged for shares of the​ corporation's common stock if certain conditions are met are called

Cost of new parking lot constructed on the land

Crater Corporation purchased land for a new building. Which of the following costs would not be included in the cost of the land?

The company incurred new debt financing in 2021​, but it may or may not have been more profitable.

Dart​ Corporation's leverage ratio increased from 2.5 in 2020 to 3.0 in 2021. Without looking at the financial​ statements, which statement best describes what may have​ occurred

increases each period as the bonds approach maturity

If bonds are issued at a discount and the​ effective-interest method is​ used, the amount of interest expense

Net income is overstated and assets are overstated

Kline Company failed to record depreciation of equipment. How does this omission affect Kline's financial statements?

net income is overstated and assets are overstated

Kline Company failed to record depreciation of equipment. How does this omission affect Kline's financial statements?

credit to Discount on Bonds Payable.

Mcdonaugh Corporation issued $250,000 of 5​%, 10​-year bonds payable on January​ 1, 2022. The market interest rate when the bonds were issued was 8​%. Interest is paid semiannually on January 1 and July 1. The first interest payment is July​ 1, 2022. Mcdonaugh recorded interest expense of $7,961 using the​ effective-interest amortization method. Mcdonaugh​'s entry to record the interest expense on July​ 1, 2022​, will include a

debit Interest Expense and credit Cash.

Mission Furniture issued $500,000 in bonds payable at par. The journal entry to record a semiannual interest payment on these bonds would

debit interest expense and credit cash

Mission Furniture issued​ $500,000 in bonds payable at par. The journal entry to record a semiannual interest payment on these bonds would

contra account to bonds payable

The Discount on Bonds Payable account

is a contra account to Bonds Payable.

The Discount on Bonds Payable account

Bonds Payable minus Discount on Bonds Payable

The carrying value of Bonds Payable equals

Bonds Payable minus Discount on Bonds Payable.

The carrying value of Bonds Payable equals

- plus Premium on Bonds Payable. - minus Discount on Bonds Payable.

The carrying value on bonds equals Bonds Payable

plus Premium on Bonds Payable and minus Discount on Bonds Payable

The carrying value on bonds equals Bonds Payable

total debt by total assets.

The debt ratio is calculated by dividing:

total debt by total assets.

The debt ratio is calculated by​ dividing:

double declining balance method

The depreciation method that does not initially use the residual value in depreciation calculations is the

double declining balance method

The depreciation method that does not initially use the residual value in depreciation calculations is the...

additional interest expense over the life of the bond

The discount on a bond payable becomes

additional interest expense over the life of the bonds.

The discount on a bond payable becomes

a debit to Bond Payable for $2,500,000

The journal entry on the maturity date to record the retirement of bonds with a face value of $2,500,000 that were issued at a $90,000 discount includes

assets; common​ stockholders' equity

The leverage ratio is equal to average total​ ________ divided by average​ _______ .

Investing cash flow

The purchase of new equipment with cash would appear on the statement of cash flows as​ a/an

Balance Sheet

Thomastown Corporation purchased a new delivery van on the last day of its fiscal year. The cost of the delivery van will appear on Thomastown's _______________ in the year of purchase.

the company has became more efficient

Total asset turnover has increased at the Mattison Corporation since last year. This increase must mean that

Contra liability; Debit

What type of account is Discount on Bonds Payable and what is its normal balance?

Contra liability; Debit

What type of account is Discount on Bonds Payable and what is its normal​ balance?

income statement

When a company expenses the cost of maintenance for its fleet of delivery vehicles, that cost will appear on its

carrying value of the bonds.

When a company retires bonds early, the gain or loss on the retirement is the difference between the cash paid and the

carrying value of the bonds.

When a company retires bonds​ early, the gain or loss on the retirement is the difference between the cash paid and the

amount of interest expense less the cash paid for interest

When the​ effective-interest method is​ used, the amount of bond discount amortized each interest period is equal to the

- Income Statement: Cost of goods sold - Balance Sheet: Accumulated depreciation

Which of the following costs are reported on a company's income statement and balance sheet?

INCOME STATEMENT: COGS BALANCE SHEET: ACCUMULATED DEPRECIATION

Which of the following costs are reported on a​ company's income statement and balance​ sheet?

Return on assets

Which of the following is a measure of​ profitability?

Patent Copyright trademark franchises & licenses

Which of the following is an intangible​ asset?

The asset cost is greater than​ $100,000.

Which of the following is not one of the criteria for determining whether a lease is a finance​ lease?

Accounts payable

Which of the following items is most likely a short-term liability?

accounts payable

Which of the following items is most likely a​ short-term liability?

Taxes paid in conjunction with the purchase of office equipment

Which of the following items should be accounted for as a capital expenditure?

TAXES PAID IN CONJUNCTION WITH THE PURCHASE OF OFFICE EQUIPMENT

Which of the following items should be accounted for as a capital​ expenditure?

The net book value of the asset is more than the​ asset's estimated future cash flows.

Which of the following situations indicates that an asset is​ impaired?

Depreciation should not be recorded in years in which the market value of the asset has increased

Which statement about depreciation is false?

Depreciation should not be recorded in years in which the market value of the asset has increased.

Which statement about depreciation is​ false?

balance sheet

Whitmore Corporation purchased a new delivery van on the last day of its fiscal year. The cost of the delivery van will appear on Whitmore's _______________ in the year of purchase.

overstate the current ratio.

​Maridell's Fashions has a debt that has been properly reported as a​ long-term liability up to the present year ​(2021​). Some of this debt comes due in 2021. If​ Maridell's Fashions continues to report the current position as a​ long-term liability, the effect will be to