1. Cooporations finance their operations through

a. Short-term debt

b. Long-term debt

c. Equity

d. All of these are correct

2. One of the main factors that infulences the decision to issue debt or equity is the effect that various financing alternatives will have on

a. EPS

b. Net Income

c. Interest Expense

d. All of these are correct

3. The interest rate to be paid on the face amount of the bond is called the

a. contract rate

b. effective rate

c. discount rate

d. none of these are correct

4. When a corporation issues bonds, the proceeds recieved for the bonds will depend on

a. the face amound of the bonds

b. the interest rate on the bonds

c. the market rate of interest for similar bonds

d. all of these are correct

5. When bonds are issued at their face amount, the journal entry will include

a. credit to premium on bonds payable

b. debit to discount on bonds payable

c. credit to cash

d. credit to bonds payable

6. The semiannual interest payment on a $10,000, 5% bond is

a. $250

b. $500

c. $2500

d. none of these are correct

7. The journal entry to record the amortization of a bond discount includes a

a. a debit to discount on bonds payable

b. a credit to discount on bonds payable

c. a credit to interest expense

d. all of these

8. The entry to amortize a bond premium would include a

a. a debit to premium on bonds payable

b. a credit to premium on bonds payable

c. a credit to intrest expense

d. all of these

9. When an installment note is issued, the journal entry will include a

a. debit to notes payable

b. debit to cash

c. credit to cash

d. none of these