Competency 1

1. An example of a long-term liability might be:
   1. A 30-day Trade Accounts Payable
   2. A six-month Notes Payable
   3. A 10-year Bond Payable due next year
   4. A 30-year Mortgage Payable
2. If a bond is issued at a premium, this indicates that:
   1. The stated rate exceeds the market rate.
   2. The bond is a deep discount bond.
   3. The stated rate and the market rate are the same.
   4. No relationship exists between the market rate and the state rate.
3. T & P Company redeems a Bond Payable with a carrying value of $40,000 for a total of $45,000 which includes $500 of accrued interest. T & P will record:
   1. A $45,000 gain.
   2. A $45,000 loss
   3. A $4,500 gain
   4. A $4,500 loss
4. B & S Company buys a bond for $62,000 in cash, plus $1,200 in broker