Accounting multiple Choice?

1.From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that a.bond interest is deductible for tax purposes. b.interest must be paid on a periodic basis regardless of earnings. c.income to shareholders may increase as a result of trading on the equity. d.the bondholders do not have voting rights. 2.Which of the following is not an advantage of issuing bonds instead of common shares? a.Shareholder control is not affected. b.Earnings per share may be lower. c.Income to common shareholders may increase. d.Both b and c are advantages to issuing bonds instead of common shares. 3.Investors who receive cheques in their names for interest earned on bonds must hold a.registered bonds. b.coupon bonds. c.bearer bonds. d.direct bonds. 4.Which of the following statements pertaining to fixed-rate, long-term Notes Payable is correct? a.Blended payments result in the same amount of principal being paid at every payment date. b.When blended payments are made, a progressively larger portion of the payment goes toward the principal while a progressively smaller portion of the payment goes toward the interest. c.When blended payments are made, a progressively smaller portion of the payment goes toward the principal while a progressively larger portion of the payment goes toward the interest. d.Blended payments do not apply to long-term Notes Payable. 5.The contractual interest rate of the Bombardier bonds is a.less than the market rate of interest. b.greater than the market rate of interest. c.equal to the market rate of interest. d.not determinable. 6.The interest expense recorded on an interest payment date is increased a.by the amortization of premium on bonds payable. b.by the amortization of discount on bonds payable. c.only if the bonds were sold at face value. d only if the market rate of interest is less than the stated rate of interest on that date. 7.Torrez Corporation issues 1,000, 10-year, 8%, $1,000 bonds dated January 1, 2007, at 97. The journal entry to record the issue will show a a.debit to Cash for $1,000,000. b.credit to Discount on Bonds Payable for $30,000. c.credit to Bonds Payable for $970,000. d.debit to Cash for $970,000. 8.Over the term of the bonds, the balance in the Discount on Bonds Payable account will a.fluctuate up and down if the market is volatile. b.decrease. c.increase. d.be unaffected until the bonds mature. 9.A $300,000 bond was retired at 98 when the carrying value of the bond was $296,000. The entry to record the retirement would include a a.gain on bond redemption of $4,000. b.loss on bond redemption of $2,000. c.loss on bond redemption of $4,000. d.gain on bond redemption of $2,000. 10.A lease where the intent is temporary use of the property by the lessee with continued ownership of the property by the lessor is called a.off-balance sheet financing. b.an operating lease. c.a capital lease. d.a purchase of property.

6 months ago - 1 answers