18 Jan Occurs when the contractual

ACC556 Financial Accounting for Managers

CHAPTER 10 EXERCISE

Question 1 Most notes are not interest bearing.

Question 2 Unearned revenues are received before goods are delivered or services are rendered.

Question 3 Material gains or losses on bond redemption are reported as part of other gains/losses on the income statement.

Question 4 Liabilities are classified on the balance sheet as current or

Question 5 With an interest-bearing note, the amount of assets received upon issuance of the note is generally

Question 6 The interest charged on a $70,000 note payable, at the rate of 6%, on a 90-day note would be

Question 7 On January 1, 2014, Keisler Company, a calendar-year company, issued $700,000 of notes payable, of which $175,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2014, is

Question 8 Norlan Company does not ring up sales taxes separately on the cash register. Total receipts for October amounted to $29,400. If the sales tax rate is 5%, what amount must be remitted to the state for October’s sales taxes?

Question 9 Stockholders of a company may be reluctant to finance expansion through issuing more equity because

Question 10 Which of the following is not an advantage of issuing bonds instead of common stock?

Question 11 When authorizing bonds to be issued, the board of directors does not specify the

Question 12 If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount

Question 13 If bonds are issued at a discount, it means that the

Question 14 In the balance sheet, the account Discount on Bonds Payable is

Question 15 If bonds have been issued at a discount, then over the life of the bonds the

Question 16 Ervay Company has $875,000 of bonds outstanding. The unamortized premium is $12,600. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?

Question 17 The relationship between current assets and current liabilities is

Question 18 Match the items below by entering the appropriate code letter in the space provided.

Question

Long term liabilities issued against the general credit of the borrower

Bonds that may be coverted into common stock at the bondholder’s option

Off-balance sheet financing

The rate investors demand for loaning funds to a corporation.

Occurs when the contractual rate of interest is less than the market rate of interest.

A measure of a company’s short-term liquidity.

Produces a periodic interest expense that is the same amount each interest period.

A measure of a company’s solvency.

Bonds subject to retirement at a stated dollar amount prior to maturity.

The time that the final payment on a bond is due from the bond issuer.