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