All of the following are advantages of issuing stock except it:

:

Question 2

The journal entry to record accrued interest on a short-term note payable must include a:

Selected Answer:

Question 3

Edna Corporation signed a lease for a $60,000 automobile. The automobile has an estimated useful life of 5 years. This lease would be considered to be a capital lease if:

Selected Answer:

Question 4

The carrying value of a bond immediately after the bond was issued was $142,500. The bond price was 95. The face value of the bond was:

Selected Answer:

Question 5

The discount on bonds payable:

Selected Answer:

Question 6

Bonds with a 7% interest rate were issued when the market rate of interest was 8%. This bond was issued at:

Selected Answer:

Question 7

Davis Companys sales for July 16 were $10,800. Davis is required to collect a 7.5% state sales tax. The total cash received from customers was:

Selected Answer:

Question 8

Secured bonds are also called:

Selected Answer:

Question 9

A company has a contingent loss that can be estimated and has a probable chance of occurrence. What reporting does the FASB require regarding this contingency?

Question 10

Immediately after the last interest payment, Hoffman & Stuart Company converted $2,500,000 of its bonds into 250,000 shares of $10 par value common stock. The unamortized premium on the bonds at the date of conversion was $86,625. The entry to record the conversion would include a:

Question 11

Which of the following are understated as a result of the failure to record an accrued liability?

Question 12

To determine whether a pension plan is overfunded or underfunded, a company must compare:

Question 13

Computing Magazine receives $90 in advance from a customer for a 3-year subscription. Computing Magazines entry to record this transaction would include a:

Question 14

Warranty expense should be recorded in the period:

Question 15

Any gain or loss on the early retirement of bonds should be recorded as a(n):

Question 16

A $10,000, 6% bond is quoted at 102. How much cash will be received when the bond is issued?

Question 17

A $2,500, 8% bond is quoted at 98. When the bond is issued, the Bonds Payable account will be increased by:

Question 18

The carrying amount of bonds issued at a discount is calculated by:

Question 19

Sales revenue was $2,800,000. Interest expense was $20,000. Net income was $140,000. The times interest earned is:

Question 20

Revision Company has just made the interest payment on its $4,000,000 of outstanding bonds. The unamortized discount is currently $167,400. Revision decided to retire the bonds by purchasing the bonds when the bonds were priced at 96. Which statement regarding the retirement is true?

Question 21

Which is the preferred method to use when amortizing a bond discount or premium?

Question 22

Speedo Sales credits all amounts received from customers to its Sales account. The monthly receipts were $675,250. This amount includes an 8.5% sales tax. The amount of the sales tax payable to the state is:

Question 23

On July 1 the ZackMore Corporation issues $900,000 of 10-year, 7%, bonds dated July 1 at $838,843.57 when the market rate of interest is 8%. ZackMore Corporation uses the effective-interest method of amortization. Interest is paid each June 30 and December 31. The interest expense recognized for the first semiannual interest payment on December 31 is:

Question 24

Hornbeck Company issued $200,000 bonds payable with an 8% interest rate at a price of 96. The journal entry to record the issue of the bond included a:

Question 25

Short-term notes payable:

Question 26

Amortizing the discount on a bond payable:

Question 27

The interest rate that determines the amount of cash paid to the bondholder is referred to as the:

Question 28

A company failed to recognize an accrued liability. As a result:

Question 29

All of the following criteria would qualify a lease as a capital lease except:

Question 30

The retirement of callable bonds at an amount above face value would appear on a statement of cash flows as an:

Selected Answer:

outflow in the investing activities section

Question 31

Convertible bonds may be exchanged for:

Question 32

The premium on bonds payable:

Question 33

On July 1 the Stanley Corporation issues $4,000,000 of 10-year, 7%, bonds dated July 1 at 89 when the market rate of interest is 8%. Stanley Corporation uses the straight-line method of amortization. Interest is paid each June 30 and December 31. The interest expense recognized for the first semiannual interest payment on December 31 is:

Question 34

A company wishing to expand can obtain the necessary funds by borrowing on a long-term note payable or by issuing 100,000 shares of $10 par value common stock. Net income is estimated at $318,000 if the company borrows the funds, and $360,000 if the company issues stock. The company currently has 200,000 shares of common stock outstanding. If the company issues stock, earnings per share would:

Question 35

Failure to record an accrued liability causes a company to:

Question 36

On a bonds maturity date, its face value will equal the:

Question 37

On July 1, 2004, Tyler Corporation issues $4,000,000 of 10-year bonds dated July 1, 2004, at 100 when the market rate of interest is 8%. Tyler Corporation uses the effective-interest method of amortization. Interest is paid each June 30 and December 31. The entry to record the first semiannual interest payment on December 31, 2004, will include a:

Question 38

Referring to question 52, the total cash paid on the maturity date of the note is:

Question 39

Potential liabilities that depend on future events arising out of past events are called:

Question 40

A company wishing to expand can obtain the necessary funds by borrowing on a long-term note payable or by issuing 100,000 shares of $10 par value common stock. Net income is estimated at $318,000 if the company borrows the funds, and $360,000 if the company issues stock. The company currently has 200,000 shares of common stock outstanding. If the company issues stock, earnings per share would be: