Accounting 101

1. There is an inverse relationship between the discount rate and the selling price of a bond.

True

False

2. Companies are not required to disclose the details of their long-term loans in the notes to the financial statements.

True

False

3. A public offering is open to all investors including institutionsreceivable occur when a company buys goods or services on credit.

True

False

4) Long-term liabilities are significant to users for all of the following reasons, except

a) it affects the company for many years in to the future

b) it has an impact on the firms liquidity.

c) it provides information on potential litigation and contractual obligations

d) it provides information about the health of employee pension plans.

5) Long-term liabilities include all of the following, except for

a) future income taxes.

b) lease liabilities.

c) wage obligations.

d. pension liabilities.

6). All of the following are used to determine the bond premium or the bond discount except for

a) market rate.

b) yield rate.

c) coupon rate.

d) capital rate.

7). A bond issue is a form of

a) equity financing.

b) debt financing.

c) collateral financing.

d) financing similar to an instalment loan.

8). Reasons a company may choose to lease an asset include all of the following, except for

a) short-term need for the asset.

b) high risk of obsolescence.

c) lack of cash.

d) preferential tax treatment of leased assets.

9). A lease will be reflected on the Statement of Financial Position of the lessee as

a) a current liability.

b) a non-current liability.

c) a non-current liability and a fixed asset.

d) nothing; it is not reflected on the Statement of Financial Position.