TRUE-FALSE STATEMENTS 1. Each bondholder may vote for the board of directors in proportion to the number of bonds held 2. Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation. 3. The contractual interest rate is always equal to the market interest rate on the date that bonds are issued. 4. Irs150,000 face value bonds are issued at 103, the proceeds received will be $103,000. 5. If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date. MULTIPLE CHOICE QUESTIONS 6 The contractual interest rate is always stated as a(n) a. monthly rate. b. daily rate. c. semiannual rate. d. annual rate. 7. A corporation recognizes a gain or loss a. only when bonds are converted into common stock. b. only when bonds are redeemed before maturity c. when bonds are redeemed at or before maturity d. when bonds are converted into common stock and when they are redeemed before maturity 8. If there is a loss on bonds redeemed early, the a. loss is debited directly to Retained Earnings. b. bonds' carrying value was less than the redemption price. c. bonds' carrying value was greater than the redemption price