20) The most common type of liability is A) One that comes into existence due to a loss contingency. B) One that must be estimated C) One that comes into existence due to a gain contingency. D) One to be paid in cash and for which the amount and timing are known. 21) Which of the following is the best definition of a current liability? A) An obligation payable within coe year. B) An obligation payable within one year of the balance sheet date. C) An obligation payable within one year or within the normal operating cycle, whichever is leeper D) An obligation expected to be satisfied with current assets or by the creation of other current Habilities 22) The key accounting considerations relating to accounts payable are: A) Determining their existence and ensuring that they are recorded in the appropriate accounting period. B) Determining their present value and ensuring that they are recorded in the appropriate accounting period. C) Determining their existence and determining the correct amount D) Determining the present value of the principal and the amount of the interest 23) Classifying liabilities as either current or long-term helps creditors assess A) Profitability, B) The relative risk of a firm's liabilities C) The degree of a firm's liabilities D) The amount of a firm's liabilities 24) When cash is received from customers in the form of a refundable deposit, the cash account is increased with a corresponding increase in A) A current liability B) Revenue C) Shareholders' equity. D) Paid-in capital 25) The rate of interest that actually is incurred on a note payable is called the A) Face rate. B) Contract rate. -C) Effective rate. D) Stated rate. - 50 A B C D E 37) Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2021. LPC's accountant has projected the following amortization schedule from issuance until maturity Cash interest Effective interest Decrease in balance Date 1/1/2021 6/30/2021 12/31/2021 6/30/2022 12/31/2022 6/30/2023 12/31/2023 6/30/2024 12/31/2024 $ 789 813 837 $ 7,000 7,000 7,000 7,000 7,000 7,000 7.000 7,000 $ 6,211 6,187 6,163 6,137 6,112 6,085 6.057 6.029 Outstanding balance $ 207,020 206,230 205417 204.580 203.717 202.829 201.913 200,971 200.000 863 888 915 943 LPC issued the bonds: A) At par B) At a premium C) At a discount D) Cannot be determined from the given information 38) A $500,000 bond issue sold at 98. Therefore, the bonds: A) Sold at a discount because the stated rate of interest was lower than the effective rate. B) Sold for the $500,000 face amountless $10,000 of accrued interest. C) Sold at a premium because the stated rate of interest was higher than the yield rate. D) Sold at a discount because the effective interest rate was lower than the face rate. 39) Bond X and bond Y both are issued by the same company. Each of the bonds has a maturity value of $100,000 and each pays interest at 8%. The current market rate of interest is 8% for each Bond X matures in 7 years while bond Y matures in 10 years. Which of the following is correct? A) Both bonds sell for the same amount. B) Both bonds sell for more than 100.000 C) Bond X sells for more than bond Y. D) Bond Y sells for more than bond X 40) A bond issue with a face amount of $500,000 bears interest at the rate of 10%. The current market rate of interest is 11%. These bonds will sell at a price that is: A) Equal to $500,000. B) More than $500,000. C) Less than $500,000 D) The answer cannot be determined from the information provided. ORD antron M-102 bre.com .882-E - - - - 44 CAN 45 EA>
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