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) ______