Question 1

The current balance sheet of Blawnox Inc.reports total assets of $20 million, total liabilities of $2 million, and owners' equity of $18 million.Blawnox Inc.is considering several financing possibilities in order to expand operations.If Blawnox Inc.'s owner invests an additional $2 million to finance the expansion, the debt to equity ratio will

Accepted Answer

A)   stay the same
B)   decrease
C)   increase
D)   cannot be determined from this information.E) B) and D)
F) All of the above

Question 2

Match the following bond and long-term liability related terms to the appropriate definition.
-The excess of the issue price over the face value of bonds.It occurs when the face rate on the bonds exceeds the market rate.

Accepted Answer

A)  Long-term liability
B)  Face value
C)  Debenture bonds
D)  Serial bonds
E)  Callable bondsF) Face rate of interestG) Market rate of interestH) Bond issue priceI) PremiumJ) DiscountK) Effective interest method of amortizationL) Carrying valueM) Gain or loss on redemptionN) H) and M)
O) E) and H)

Question 3

Which of the following statements regarding leases is false?

Accepted Answer

A)   Lease agreements are a popular form of financing the purchase of assets because leases do not require a large initial outlay of cash.
B)   Accounting recognizes two types of leases-operating and capital leases.
C)   If a lessor classifies a lease as a capital lease, then the lessee records a lease liability on its balance sheet.
D)   If a lease is classified as an operating lease, the lessee records a lease liability on its balance sheet.E) A) and B)
F) B) and C)

Question 4

Match the following bond and long-term liability related terms to the appropriate definition.
-Bonds that do not all have the same due date.A portion of the bonds comes due each time period.

Accepted Answer

A)  Long-term liability
B)  Face value
C)  Debenture bonds
D)  Serial bonds
E)  Callable bondsF) Face rate of interestG) Market rate of interestH) Bond issue priceI) PremiumJ) DiscountK) Effective interest method of amortizationL) Carrying valueM) Gain or loss on redemptionN) A) and J)
O) B) and J)

Question 5

Endeavor Company issued 20-year bonds with a coupon rate of 6% when the market rate of interest was 9%.This means that the bonds were issued

Accepted Answer

A)   at a premium.
B)   at a discount.
C)   at the face value.
D)   with an additional 3 years of interest.E) B) and D)
F) B) and C)

Question 6

When a bond is retired early and the redemption price is greater than the bond's carrying value, there will be a(n) ______________________ on redemption.

Accepted Answer

The answer of When a bond is retired early and...

Question 7

Amortized discount is computed annually when a bond is issued for other than its face value.For a bond issued at a discount, how will this component change as the bond approaches maturity?

Accepted Answer

A)   decrease
B)   increase
C)   remain constant
D)   not enough information given to decideE) A) and B)
F) A) and C)

Exam 10: Long-Term Liabilities

When a bond is retired early and the redemption price is greater than the bond's carrying value, there will be a(n) ______________________ on redemption.

Correct Answer
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Endeavor Company issued 20-year bonds with a coupon rate of 6% when the market rate of interest was 9%.This means that the bonds were issued

Correct Answer
verified

Match the following bond and long-term liability related terms to the appropriate definition. -Bonds that do not all have the same due date.A portion of the bonds comes due each time period.

Correct Answer
verified

Match the following bond and long-term liability related terms to the appropriate definition. -The excess of the issue price over the face value of bonds.It occurs when the face rate on the bonds exceeds the market rate.

Correct Answer
verified

Correct Answer
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Which of the following statements regarding leases is false?

Correct Answer
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Amortized discount is computed annually when a bond is issued for other than its face value.For a bond issued at a discount, how will this component change as the bond approaches maturity?

Correct Answer
verified

Exam 10: Long-Term Liabilities

When a bond is retired early and the redemption price is greater than the bond's carrying value, there will be a(n) ______________________ on redemption.

Correct AnswerverifiedShow Answer

Endeavor Company issued 20-year bonds with a coupon rate of 6% when the market rate of interest was 9%.This means that the bonds were issued

Correct AnswerverifiedShow Answer

Match the following bond and long-term liability related terms to the appropriate definition. -Bonds that do not all have the same due date.A portion of the bonds comes due each time period.

Correct AnswerverifiedShow Answer

Match the following bond and long-term liability related terms to the appropriate definition. -The excess of the issue price over the face value of bonds.It occurs when the face rate on the bonds exceeds the market rate.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements regarding leases is false?

Correct AnswerverifiedShow Answer

Amortized discount is computed annually when a bond is issued for other than its face value.For a bond issued at a discount, how will this component change as the bond approaches maturity?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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