1. Each of the following is correct regardingbonds except they are a. attractive
ID: 2434173 • Letter: 1
Question
1. Each of the following is correct regardingbonds except they area. attractive to many investors.
b. sold in large denominations.
c. a form of interest-bearing notes payable.
d. issued by corporations and governmental agencies.
2. Which of the following statements concerning bonds is not a truestatement?
a. The trustee keeps records of each bondholder.
b. The bond indenture and bond certificate are separatedocuments.
c. The bond indenture is prepared after the bonds are printed.
d. Bonds are generally sold through an investment company.
3. Corporations are granted the power to issue bondsthrough
a. federal security laws.
b. state laws.
c. tax laws.
d. bond debentures.
4. The total cost of borrowing is increased only if the
a. bonds were sold at face value.
b. bonds were issued at a premium.
c. bonds were issued at a discount.
d. market interest rate is less than the contractual interest rateon that date.
5. If bonds are issued at a discount, it means that the
a. financial strength of the issuer is suspect.
b. bondholder will receive effectively less interest than thecontractual interest rate.
c. market interest rate is higher than the contractual interestrate.
d. market interest rate is lower than the contractual interestrate.
6. A corporation recognizes a gain or loss
a. only when bonds are converted into common stock.
b. when bonds are converted into common stock and when they areredeemed before maturity.
c. only when bonds are redeemed before maturity.
d. when bonds are redeemed at or before maturity.
7. Which one of the following amounts increases each periodwhen accounting for long-term notes payable?
a. Principal balance
b. Reduction of principal
c. Cash payment
d. Interest expense
8. The lessee has substantially all of the benefits and risksof ownership in a(n)
a. operating lease.
b. apartment lease.
c. operating lease and a capital lease.
d. capital lease.
9. In a lease contract,
a. the renter of the property is called the lessor.
b. the presence of a bargain purchase option indicates that it is acapital lease.
c. the owner of the property is called the lessee.
d. there is always a transfer of ownership at the end of the leaseterm.
10. The present value of a bond is also known as its
a. deferred value.
b. market price.
c. face value.
d. future value.
11. When the effective-interest method of bond discountamortization is used,
a. interest paid to bondholders will be a function of theeffective-interest rate on the date the bonds are issued.
b. the carrying value of the bonds will decrease each period.
c. interest expense will not be a constant dollar amount over thelife of the bond.
d. the applicable interest rate used to compute interest expense isthe prevailing market interest rate on the date of each interestpayment date. 1. Each of the following is correct regardingbonds except they are
a. attractive to many investors.
b. sold in large denominations.
c. a form of interest-bearing notes payable.
d. issued by corporations and governmental agencies.
2. Which of the following statements concerning bonds is not a truestatement?
a. The trustee keeps records of each bondholder.
b. The bond indenture and bond certificate are separatedocuments.
c. The bond indenture is prepared after the bonds are printed.
d. Bonds are generally sold through an investment company.
3. Corporations are granted the power to issue bondsthrough
a. federal security laws.
b. state laws.
c. tax laws.
d. bond debentures.
4. The total cost of borrowing is increased only if the
a. bonds were sold at face value.
b. bonds were issued at a premium.
c. bonds were issued at a discount.
d. market interest rate is less than the contractual interest rateon that date.
5. If bonds are issued at a discount, it means that the
a. financial strength of the issuer is suspect.
b. bondholder will receive effectively less interest than thecontractual interest rate.
c. market interest rate is higher than the contractual interestrate.
d. market interest rate is lower than the contractual interestrate.
6. A corporation recognizes a gain or loss
a. only when bonds are converted into common stock.
b. when bonds are converted into common stock and when they areredeemed before maturity.
c. only when bonds are redeemed before maturity.
d. when bonds are redeemed at or before maturity.
7. Which one of the following amounts increases each periodwhen accounting for long-term notes payable?
a. Principal balance
b. Reduction of principal
c. Cash payment
d. Interest expense
8. The lessee has substantially all of the benefits and risksof ownership in a(n)
a. operating lease.
b. apartment lease.
c. operating lease and a capital lease.
d. capital lease.
9. In a lease contract,
a. the renter of the property is called the lessor.
b. the presence of a bargain purchase option indicates that it is acapital lease.
c. the owner of the property is called the lessee.
d. there is always a transfer of ownership at the end of the leaseterm.
10. The present value of a bond is also known as its
a. deferred value.
b. market price.
c. face value.
d. future value.
11. When the effective-interest method of bond discountamortization is used,
a. interest paid to bondholders will be a function of theeffective-interest rate on the date the bonds are issued.
b. the carrying value of the bonds will decrease each period.
c. interest expense will not be a constant dollar amount over thelife of the bond.
d. the applicable interest rate used to compute interest expense isthe prevailing market interest rate on the date of each interestpayment date.
Explanation / Answer
Answers: According to me, the answers are;1. a form of interest-bearing notes payable.
2. The bond indenture and bond certificate are separatedocuments.
3. bond debentures.
4. market interest rate is less than the contractual interest rateon that date.
5. bondholder will receive effectively less interest than thecontractual interest rate.
6. when bonds are converted into common stock and when they areredeemed before maturity.
7. Interest expense
8. operating lease and a capital lease.
9. there is always a transfer of ownership at the end of thelease term.
10. face value.
11. the applicable interest rate used to compute interest expenseis the prevailing market interest rate on the date of each interestpayment date.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.