Financial Accounting
Loans requiring periodic payments of interest and principle are referred to as _____ notes.
installment
____bonds are retired when the bondholder exchanges them for the issuing company's stock.
convertible
Corporate bonds most often pay interest _____.
semiannually
______ bonds require payment of the full principle amount of the bond at the end of the loan term.
term
Callable bonds can be redeemed at the choice of
the bond issuer
Financing with ____ requires borrowing, whereas financing with _______ requires issuing shares of stock. (Enter one word per blank.)
1. debt or liabilities 2. equity
Which of the following are correct regarding bonds?
They obligate the issuing company to pay a specific amount. They obligate the issuing company to repay the bonds at a specific date.
Periodic payments on installment notes typically include (Select all that apply.)
- a portion that reduces the outstanding loan balance. - a portion that reflects interest.
ABC Company issues a bond with a face value of $100,000 at face amount on January 1. The bond carries a stated annual interest rate of 6% payable in cash on December 31 of each year. If ABC issues monthly financial statements, it must make an adjusting entry on January 31 that includes ______.
a credit to Interest payable of $500 a debit to Interest expense of $500
In a private placement of bonds, bonds may be sold to
a single large investor
The journal entry to record the issuing of 100 bonds at their $1,000 face value will include a debit to ______ and a credit to ______.
cash; Bonds Payable NOTE: Bonds Receivable would not be credited unless you had previously loaned money and are getting paid back.
Which of the following are common characteristics or provisions of bonds?
convertible callable term or serial secured or unsecured
A(n) _____ , is a contractual arrangement in which an owner provides a user the right to use an asset for a specified period of time. (Enter one word per blank) - in return for periodic cash payments over a period of time
lease
