ACG 2021 Learn Smart Ch. 9
Munster Inc. Issues $20 million in bonds and pledges its land holdings as collateral. Munster's bonds are:
Secured
Common characteristics or provisions of bonds?
Secured or unsecured Convertible Callable
Convertible bonds allow the lender to convert each bond into
a specified share of common stock
Corporate bonds most often pay interest ___________
semiannually
In a private placement of bonds, bonds may be sold to
A single large investor
Promissory notes requiring periodic payments of interest and principle are referred to as _____________ notes
installment
Which of the following types of leases results in high total liabilities reported on the balance sheet?
Capital Lease
_____________ leases occur when a lessee essentially buys an asset and borrows the money through a lease to pay for the asset
capital
The mixture of debt financing and equity financing a company uses is referred to as
capital structure
Walker Inc. signs a $24,000 installment note, which requires equal monthly payments of $1,100 over the next 2 years. The journal entry to recognize the note includes:
Credit to Notes Payable for $24,000
The journal entry to recognize the signing of an installment notes payable includes:
Debit Cash Credit Notes Payable
Callable bonds can be redeemed at the choice of the
bond issuer
A corporation that wishes to borrow from the general public rather than a bank will issue...
bonds
An advantage to financing with debt is that
interest is tax deductible
A ____________ is a contractual arrangement in which an owner provides a user the right to use an asset for a specified period of time.
lease
Improved cash flows and lower income taxes are common advantages of acquiring equipment through
leasing
A lease that specifies that the rights and risks of ownership are retained by the lessor is classified as a
operating lease
Periodic payments on installment notes typically include
A portion that reflects interest at the effective interest rate A portion that reduces the outstanding loan balance
Which of the following are methods of long-term financing with debt?
Bonds Leases Notes Payable
Bonds that require payment of the full principle amount of the bond at the end of the loan term are referred to as
Term bonds