Chapter 10 - Post-Lecture Assignment

The entry to record the issuance of an interest-bearing note includes a credit to Notes Payable for the note's a. face value. b. market value. c. cash realizable value. d. maturity value.

a. face value.

Discount on Bonds Payable a. is a contra account. b. is added to bonds payable on the balance sheet. c. increases over the term of the bonds. d. has a credit balance.

a. is a contra account.

Current or short-term liabilities under IFRS are a. expected to be paid within 12 months or the operating cycle, whichever is longer. b. presented in order of liquidity. c. presented before long-term liabilities on the statement of financial position. d. presented in the order of maturity.

b. presented in order of liquidity.

On January 1, Cleopatra Corporation issued $2,000,000, 14%, 5-year bonds with interest payable on December 31. The bonds sold for $2,144,192. The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for a. $251,162. b. $240,000. c. $280,000. d. $257,303.

d. $257,303.

Which one of the following amounts increases each period when accounting for long-term mortgage payable? a. Principal balance. b. Interest expense. c. Cash payment. d. Reduction of principal.

d. Reduction of principal.

The market price of a bond is dependent on a. the payments amounts. b. the length of time until the amounts are paid. c. the interest rate. d. all of these answer choices are correct.

d. all of these answer choices are correct.

All of the following are advantages of bond financing over common stock except a. tax savings. b. stockholder control is not affected. c. possibly higher earnings per share. d. higher net income.

d. higher net income.

Both the straight-line method and the effective-interest method of amortization will always result in a. the same carrying value each year during the term of the bonds. b. the same amount of interest expense being recognized each year. c. more interest expense being recognized than if premium or discounts were not amortized. d. the same amount of interest expense being recognized over the term of the bonds.

d. the same amount of interest expense being recognized over the term of the bonds.