1/ When the selling price of a bond is stated at 100, it means that the bonds are selling

a.at a premium.

b.at face value.

c.below par value.

2/ Bondholders have which of the following relationships with a corporation?

a.They are silent managers.

b.They are owners.

c.They are creditors.

d.They become members of the board.

d.at a discount.

3/ The bonds payable account would be classified as a(n)

a.contra-liability.

b.current liability.

c.adjunct-liability.

d.long-term liability.

4/ When selling bonds at a premium, the premium received effectively

a.does not affect the cost of borrowing.

b.reduces the amount of cash received when bonds are sold.

5/ A bond issue of $500,000 selling at 100, would require a journal entry including a

a.credit to Bonds Payable of $500,000.

b.credit to Premium on Bonds Payable for $500,000.

c.debit to Bonds Payable of $500,000.

d.credit to Cash of $500,000.

c.increases the cost of borrowing.

d.reduces the cost of borrowing.