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Accounting Multiple Choice MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) On March 1, 2015, Vantage Services

Accounting Multiple Choice

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1) On March 1, 2015, Vantage Services issued a 5% long-term notes payable for $15,000. It is payable over a 3-year term in $5,000 annual principal payments on March 1 of each year plus interest, beginning March 1, 2016. How will this information be shown on the balance sheet dated December 31, 2015?

1) _______

A) the entire $15,000 shown as long-term liability

B) $5,000 shown as current liability and $10,000 shown as long-term liability

C) $15,000 shown as current liability only

D) $5,000 shown as current liability and $15,000 shown as long-term liability

2) On March 1, 2015, Vantage Services issued a 5% long-term notes payable for $15,000. It is payable over a 3-year term in $5,000 principal installments on March 1 of each year, beginning March 1, 2016. Each yearly installment will include both principal repayment of $5,000 and interest payment for the preceding one-year period. What is the amount of total cash payment that Vantage will make on March 1, 2016?

2) _______

A) $5,750 B) $5,000 C) $5,375 D) $15,000

3) A bond is issued at premium ________. 3) _______

A) when a bond's stated interest rate is less than the effective interest rate

B) when a bond's stated interest rate is equal to the market interest rate

C) when a bond's stated interest rate is less than the market interest rate

D) when a bond's stated interest rate is higher than the market interest rate

4) The date on which the principal amount is repaid to the bondholder is known as ________. 4) _______

A) installment date B) issuing date

C) maturity date D) interest date

5) The reason investors buy bonds is to ________. 5) _______

A) exercise voting rights in a company B) own controlling interest in the company

C) receive dividend payments D) earn interest

6) The interest rate on which cash payments to bondholders are based is the ________. 6) _______

A) stated rate B) amortization rate C) discount rate D) market rate

7) If bonds with a face value of $200,000 are sold at 98, the amount of cash proceeds is ________. 7) _______

A) $196,000 B) $192,157 C) $202,000 D) $200,000

8) On January 1, 2015, Carter Sales issued $15,000 in bonds for $14,700. They were 6-year bonds with a stated rate of 9%, and pay semiannual interest. Carter Sales uses the straight-line method to amortize the Bond Discount. Immediately after the issue of the bonds, the ledger balances appeared as follows:

After the first interest payment on June 30, 2015, what will be the balance in the Discount Account? 8) _______

A) Credit of $25 B) Debit of $325 C) Debit of $275 D) Debit of $300

9) Refer to the following list of liability balances at December 31, 2015.

Accounts Payable

$ 13,000

Employee Health Insurance Payable

450

Employee Income Tax Payable

400

Estimated Current Warranty Payable

600

Long-Term Notes Payable(Due 2019)

33,000

FICAOASDI Taxes Payable

560

Sales Tax Payable

370

Mortgage Payable(Due 2020)

6,000

Bonds Payable(Due 2021)

53,000

Current Portion of Long-Term Notes Payable

3,500

What is the total amount of current liabilities? 9) _______

A) $18,880 B) $14,980 C) $15,380 D) $14,380

10) If $12,000 is invested for one year at an annual interest rate of 12%, it will grow in value to ________. 10) ______

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