When treasury stock is sold for more than the company originally paid to purchase the shares, the difference:A) Increases net income.B) Increases stockholders'...
A company currently has 200,000 shares issued and 190,000 shares outstanding. If the company purchases 20,000 shares of treasury stock, what amount of shares will be outstanding?
A company currently has 200,000 shares issued and 190,000 shares outstanding. If the company purchases 20,000 shares of treasury stock, what amount of...
The purchase of treasury stock can boost earnings per share by:
The purchase of treasury stock can boost earnings per share by:A) Increasing the number of shares outstanding.B) Increasing profits.C) Reducing the number...
Why would a corporation purchase its own stock?
Why would a corporation purchase its own stock?A) To distribute surplus cash without paying dividends.B) To boost earnings per share.C) To satisfy employee...
The corporation's own stock that has been issued and then bought back by the company is referred to as:
The corporation's own stock that has been issued and then bought back by the company is referred to as:A) Preferred Stock.B) Authorized Stock.C) Treasury...
What would be the impact on the accounting equation when a company acquires treasury stock?
What would be the impact on the accounting equation when a company acquires treasury stock?A) Increase assets and increase stockholders' equity.B) Decrease...
Which of the following is TRUE regarding the accounting for treasury stock?
Which of the following is TRUE regarding the accounting for treasury stock?A) Treasury stock is reported on the balance sheet in the equity section.B)...
Which of the following statements about treasury stock transactions is true?
Which of the following statements about treasury stock transactions is true?A) Treasury stock is recorded as an asset by the acquiring company.B) Only...
When an investment is made in another corporation's common stock, what is the effect on total stockholders' equity?
When an investment is made in another corporation's common stock, what is the effect on total stockholders' equity?A) Decrease.B) Increase.C) No effect.D)...
When treasury stock is acquired, what is the effect on total stockholders' equity?
When treasury stock is acquired, what is the effect on total stockholders' equity?A) Decrease.B) Increase.C) No effect.D) Cannot determine from the given...
When treasury stock is resold at a price above cost:
When treasury stock is resold at a price above cost:A) A gain account is credited.B) A loss is reported.C) A revenue account is credited.D) Additional...
A company issued 1,000 shares of $1 par value preferred stock for $5 per share. What is true about the journal entry to record the issuance?
A company issued 1,000 shares of $1 par value preferred stock for $5 per share. What is true about the journal entry to record the issuance?A) Debit Preferred...
Which of the following is not a potential feature of preferred stock?
Which of the following is not a potential feature of preferred stock?A) Convertible.B) Redeemable.C) Cumulative.D) They all are potential features of...
Which of the following financing alternatives has the highest preference for dividends/interest payments?
Which of the following financing alternatives has the highest preference for dividends/interest payments?A) Common Stock.B) Preferred Stock.C) Bonds.D)...
Which of the following is the most likely to have voting rights?
Which of the following is the most likely to have voting rights?A) Common Stock.B) Preferred Stock.C) Bonds.D) They all have similar voting rights.Answer:...
Which of the following has the lowest expected return to the investor?
Which of the following has the lowest expected return to the investor?A) Bonds.B) Preferred Stock.C) Common Stock.D) They all have similar expected returns.Answer:...
Which of the following has the highest expected return to the investor?
Which of the following has the highest expected return to the investor?A) Common Stock.B) Preferred Stock.C) Bonds.D) They all have similar expected returns.Answer:...
Preferred stock:
Preferred stock:A) Is always recorded as a liability.B) Is always recorded as part of stockholders' equity.C) Can have features of both liabilities and...
Hayes Corporation issues 100 shares of its $1 par value common stock for $15 per share. The entry to record the issuance will not include a:
Hayes Corporation issues 100 shares of its $1 par value common stock for $15 per share. The entry to record the issuance will not include a:A) Debit to...
South Beach Apparel issued 10,000 shares of $1 par value stock for $5 per share. What is true about the journal entry to record the issuance?
South Beach Apparel issued 10,000 shares of $1 par value stock for $5 per share. What is true about the journal entry to record the issuance?A) Debit...
Jade Jewelers issued 15,000 shares of $1 par value stock for $20 per share. What is true about the journal entry to record the issuance?
Jade Jewelers issued 15,000 shares of $1 par value stock for $20 per share. What is true about the journal entry to record the issuance?A) Credit Common...
Wright Inc. issued 20,000 shares of $1 par value common stock for $80,000. The journal entry to record this issuance includes a:
Wright Inc. issued 20,000 shares of $1 par value common stock for $80,000. The journal entry to record this issuance includes a:A) Credit to Common Stock...
When a company issues 25,000 shares of $1 par value common stock for $10 per share, the journal entry for this issuance would include:
When a company issues 25,000 shares of $1 par value common stock for $10 per share, the journal entry for this issuance would include:A) A debit to Cash...
When a company issues 25,000 shares of $1 par value common stock for $10 per share, the journal entry for this issuance would include:
When a company issues 25,000 shares of $1 par value common stock for $10 per share, the journal entry for this issuance would include:A) A debit to Cash...
If a company issues 1,000 shares of $1 par value common stock for $20 per share, which of the following accounts would be credited?
If a company issues 1,000 shares of $1 par value common stock for $20 per share, which of the following accounts would be credited?A) Treasury StockB)...
If a company issues 1,000 shares of $1 par value common stock for $20 per share, what would be the effect on the accounting equation?
If a company issues 1,000 shares of $1 par value common stock for $20 per share, what would be the effect on the accounting equation?A) Increase assets...
Outstanding common stock specifically refers to:
Outstanding common stock specifically refers to:A) Stock that is performing well.B) Stock that has been authorized for issuance.C) Stock issued plus treasury...
The correct order from the smallest number of shares to the largest number of shares is:
The correct order from the smallest number of shares to the largest number of shares is:A) Authorized, issued, and outstanding.B) Outstanding, issued,...
The disadvantages of the corporate form of business include:
The disadvantages of the corporate form of business include:A) Ability to transfer ownership.B) Additional taxes.C) Limited liability.D) Ability to raise...
Which of the following statements regarding the corporate form of business is correct?
Which of the following statements regarding the corporate form of business is correct?A) The disadvantages are that generating capital is difficult and...
Advantages of the corporate form of business include which of the following?
Advantages of the corporate form of business include which of the following?I. Double taxationII. Ability to raise capitalIII. Ability to transfer ownershipIV....
The articles of incorporation describe:
The articles of incorporation describe:A) The nature of the firm's business activities.B) The shares of stock to be issued.C) The initial board of directors.D)...
Which of the following is a reason that a corporation would prefer to issue stock instead of bonds?
Which of the following is a reason that a corporation would prefer to issue stock instead of bonds?A) Dividend payments can be deducted for income tax...
All publicly held corporations are regulated by what government organization?
All publicly held corporations are regulated by what government organization?A) The Financial Accounting Standards Board.B) The Commission on Accounting...
Common stockholders usually have all of the following rights except:
Common stockholders usually have all of the following rights except:A) To receive dividends when declared.B) To share in the distribution of assets.C)...
In terms of total sales, assets, and earnings, the dominant form of business organization is a:
In terms of total sales, assets, and earnings, the dominant form of business organization is a:A) Sole proprietorship.B) Partnership.C) Corporation.D)...
Which of the following stages of equity financing comes first in the traditional order of progression?
Which of the following stages of equity financing comes first in the traditional order of progression?A) Investment by friends and family of the founders.B)...
Which of the following stages of equity financing comes last in the traditional order of progression?
Which of the following stages of equity financing comes last in the traditional order of progression?A) Investment by friends and family of the founders.B)...
Which of the following is a disadvantage of an S Corporation?
Which of the following is a disadvantage of an S Corporation?A) Double TaxationB) LiabilityC) Restrictions on number of stockholdersD) Inability to transfer...
Which of the following accounts is not reported in the stockholders' equity section of the balance sheet?
Which of the following accounts is not reported in the stockholders' equity section of the balance sheet?A) Treasury Stock.B) Common Stock.C) Sales Revenue.D)...
The times interest earned ratio is calculated as
The times interest earned ratio is calculated asA) Interest expense/Net income.B) Net income/Interest expense.C) (Net income + interest expense + tax...
Which of the following is not a true statement?
Which of the following is not a true statement?A) The debt to equity ratio measures a company's risk and is calculated as total liabilities divided by...
Which of the following is true regarding a company assuming more debt?
Which of the following is true regarding a company assuming more debt?A) Assuming more debt is always bad for the company.B) Assuming more debt is always...
Financial leverage is best measured by which of the following ratios?
Financial leverage is best measured by which of the following ratios?A) The debt to equity ratio.B) The return on equity ratio.C) The times interest earned...
A company's balance sheet reports total liabilities of $2,000,000. The debt to equity ratio is 2.5. What is the company's stockholders' equity?
A company's balance sheet reports total liabilities of $2,000,000. The debt to equity ratio is 2.5. What is the company's stockholders' equity?A) $800,000B)...
A company's balance sheet reports stockholders' equity of $800,000. The debt to equity ratio is 2.5. What is the amount of the company's total liabilities?
A company's balance sheet reports stockholders' equity of $800,000. The debt to equity ratio is 2.5. What is the amount of the company's total liabilities?A)...
A company's balance sheet reports stockholders' equity of $400,000, total liabilities of $600,000, and total assets of $1,000,000. What is the company's debt to equity ratio?
A company's balance sheet reports stockholders' equity of $400,000, total liabilities of $600,000, and total assets of $1,000,000. What is the company's...
A company reports net income of $250,000. The return on assets for the year is 20%. What is the company's average total assets for the year?
A company reports net income of $250,000. The return on assets for the year is 20%. What is the company's average total assets for the year?A) $1,250,000B)...
The balance sheet of Montezuma reports total assets of $900,000 and $1,100,000 at the beginning and end of the year, respectively. The net income for the year is $100,000. What is Montezuma's return on assets?
The balance sheet of Montezuma reports total assets of $900,000 and $1,100,000 at the beginning and end of the year, respectively. The net income for...
The balance sheet of Sub America reports total assets of $400,000 and $450,000 at the beginning and end of the year, respectively. The return on assets for the year is 10%. What is Sub America's net income for the year?
The balance sheet of Sub America reports total assets of $400,000 and $450,000 at the beginning and end of the year, respectively. The return on assets...
Underwater Experiences issues a bond due in 5 years with a stated interest rate of 6% and a face value of $100,000. Interest payments are made semi-annually. The market rate for this type of bond is 5%. What is the issue price of the bond (rounded to nearest whole dollar)? (Use a financial calculator or Excel)
Underwater Experiences issues a bond due in 5 years with a stated interest rate of 6% and a face value of $100,000. Interest payments are made semi-annually....
Underwater Experiences issues a bond due in 5 years with a stated interest rate of 6% and a face value of $100,000. Interest payments are made semi-annually. The market rate for this type of bond is 7%. What is the issue price of the bond (rounded to nearest whole dollar)? (Use a financial calculator or Excel)
Underwater Experiences issues a bond due in 5 years with a stated interest rate of 6% and a face value of $100,000. Interest payments are made semi-annually....
Underwater Experiences issues a bond due in 5 years with a stated interest rate of 6% and a face value of $100,000. Interest payments are made semi-annually. The market rate for this type of bond is 5%. What is the issue price of the bond (rounded to nearest whole dollar)? (Use Table 2 and Table 4, contained within a separate file.)
Underwater Experiences issues a bond due in 5 years with a stated interest rate of 6% and a face value of $100,000. Interest payments are made semi-annually....
Underwater Experiences issues a bond due in 5 years with a stated interest rate of 6% and a face value of $100,000. Interest payments are made semi-annually. The market rate for this type of bond is 7%. What is the issue price of the bond (rounded to nearest whole dollar)? (Use Table 2 and Table 4, contained within a separate file.)
Underwater Experiences issues a bond due in 5 years with a stated interest rate of 6% and a face value of $100,000. Interest payments are made semi-annually....
Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made semi-annually. The market rate for this type of bond is 6%. What is the issue price of the bond (rounded to nearest whole dollar)? (Use a financial calculator or Excel)
Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made semi-annually....
Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made semi-annually. The market rate for this type of bond is 8%. What is the issue price of the bond (rounded to nearest whole dollar? (Use a financial calculator or Excel)
Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made semi-annually....
Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made semi-annually. The market rate for this type of bond is 6%. What is the issue price of the bond (rounded to nearest whole dollar)? (Use Table 2 and Table 4, contained within a separate file.)
Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made semi-annually....
Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made semi-annually. The market rate for this type of bond is 8%. What is the issue price of the bond (rounded to nearest whole dollar)? (Use Table 2 and Table 4, contained within a separate file.)
Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made semi-annually....
Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. Interest payments are made semi-annually. The market rate for this type of bond is 5%. What is the issue price of the bond (rounded to nearest whole dollar)? (Use a financial calculator or Excel)
Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. Interest payments are made semi-annually....
Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. Interest payments are made semi-annually. The market rate for this type of bond is 7%. What is the issue price of the bond (rounded to nearest whole dollar)? (Use a financial calculator or Excel)
Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. Interest payments are made semi-annually....
Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. Interest payments are made semi-annually. The market rate for this type of bond is 5%. What is the issue price of the bond (rounded to nearest whole dollar)? (Use Table 2 and Table 4, contained within a separate file.)
Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. Interest payments are made semi-annually....
Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. Interest payments are made semi-annually. The market rate for this type of bond is 7%. What is the issue price of the bond? (Use Table 2 and Table 4, contained within a separate file.)
Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. Interest payments are made semi-annually....
In calculating the issue price of a bond, the portion associated with the periodic interest payments is calculated using which time value factor?
In calculating the issue price of a bond, the portion associated with the periodic interest payments is calculated using which time value factor?A) Future...
In calculating the issue price of a bond, the portion associated with the principal is calculated using which time value factor?
In calculating the issue price of a bond, the portion associated with the principal is calculated using which time value factor?A) Future value of $1.B)...
Ordinarily, the proceeds from the sale of a bond issue will be equal to:
Ordinarily, the proceeds from the sale of a bond issue will be equal to:A) The face amount of the bond.B) The total of the face amount plus all interest...
The issue price of a bond is equal to:
The issue price of a bond is equal to:A) The future value of the face amount only.B) The present value of the interest only.C) The present value of the...
The Titan retires a $20 million bond issue when the carrying value of the bonds is $18 million, but the market value of the bonds is $23 million. The entry to record the retirement will include:
The Titan retires a $20 million bond issue when the carrying value of the bonds is $18 million, but the market value of the bonds is $23 million. The...
The Raptor retires a $20 million bond issue when the carrying value of the bonds is $18 million, but the market value of the bonds is $15 million. The entry to record the retirement will include:
The Raptor retires a $20 million bond issue when the carrying value of the bonds is $18 million, but the market value of the bonds is $15 million. The...
The Viper retires a $40 million bond issue when the carrying value of the bonds is $42 million, but the market value of the bonds is $36 million. The entry to record the retirement will include:
The Viper retires a $40 million bond issue when the carrying value of the bonds is $42 million, but the market value of the bonds is $36 million. The...
When bonds are retired before their maturity date:
When bonds are retired before their maturity date:A) GAAP has been violated.B) The issuing company will always report a non-operating gain.C) The issuing...
What is the market annual rate of interest on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate.)
Discount-Mart issues $10 million in bonds on January 1, 2021. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31...
What is the stated annual rate of interest on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate.)
Discount-Mart issues $10 million in bonds on January 1, 2021. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31...
An amortization schedule for a bond issued at a premium:
An amortization schedule for a bond issued at a premium:A) Has a carrying value that increases over time.B) Is contained in the balance sheet.C) Is a...
An amortization schedule for a bond issued at a discount:
An amortization schedule for a bond issued at a discount:A) Has a carrying value that decreases over time.B) Is contained in the balance sheet.C) Is a...
When bonds are issued at a premium and the effective interest method is used for amortization, at each interest payment date, the interest expense:
When bonds are issued at a premium and the effective interest method is used for amortization, at each interest payment date, the interest expense:A)...
When bonds are issued at a discount and the effective interest method is used for amortization, at each interest payment date, the interest expense:
When bonds are issued at a discount and the effective interest method is used for amortization, at each interest payment date, the interest expense:A)...
When bonds are issued at a premium and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is:
When bonds are issued at a premium and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid...
When bonds are issued at a discount and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is:
When bonds are issued at a discount and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid...
The carrying value, using the effective interest method, would increase each year:
The carrying value, using the effective interest method, would increase each year:A) If the bonds were sold at a discount.B) If the bonds were sold at...
The carrying value, using the effective interest method, would decrease each year:
The carrying value, using the effective interest method, would decrease each year:A) If the bonds were sold at a discount.B) If the bonds were sold at...
How would the carrying value of bonds payable change over time for bonds issued at a discount and for bonds issued at a premium?
How would the carrying value of bonds payable change over time for bonds issued at a discount and for bonds issued at a premium?A) Decrease for bonds...
Bonds payable should be reported as a long-term liability in the balance sheet at the:
Bonds payable should be reported as a long-term liability in the balance sheet at the:A) Face value.B) Current bond market price.C) Carrying value.D)...
When bonds are issued at a premium, what happens to the carrying value and interest expense over the life of the bonds?
When bonds are issued at a premium, what happens to the carrying value and interest expense over the life of the bonds?A) Carrying value and interest...
When bonds are issued at a discount, what happens to the carrying value and interest expense over the life of the bonds?
When bonds are issued at a discount, what happens to the carrying value and interest expense over the life of the bonds?A) Carrying value and interest...
Interest expense on bonds payable is calculated as the:
Interest expense on bonds payable is calculated as the:A) Face amount times the stated interest rate.B) Face amount times the market interest rate.C)...
The cash interest payment each period is calculated as the:
The cash interest payment each period is calculated as the:A) Face amount times the stated interest rate.B) Face amount times the market interest rate.C)...
Megginson, Inc. issued a five-year corporate bond of $300,000 with a 5% interest rate for $290,000. What effect would the bond issuance have on Megginson, Inc.'s accounting equation?
Megginson, Inc. issued a five-year corporate bond of $300,000 with a 5% interest rate for $290,000. What effect would the bond issuance have on Megginson,...
Samson Enterprises issued a ten-year, $20 million bond with a 10% interest rate for $19,500,000. The entry to record the bond issuance would have what effect on the financial statements?
Samson Enterprises issued a ten-year, $20 million bond with a 10% interest rate for $19,500,000. The entry to record the bond issuance would have what...
A bond issued at a premium indicates that at the date of issue:
A bond issued at a premium indicates that at the date of issue:A) Its stated rate was lower than the prevailing market rate of interest on similar bonds.B)...
Which of the following is true for bonds issued at a premium?
Which of the following is true for bonds issued at a premium?A) The stated interest rate is less than the market interest rate.B) The market interest...
A bond issued at a discount indicates that at the date of issue:
A bond issued at a discount indicates that at the date of issue:A) Its stated rate was lower than the prevailing market rate of interest on similar bonds.B)...
Which of the following is true for bonds issued at a discount?
Which of the following is true for bonds issued at a discount?A) The stated interest rate is greater than the market interest rate.B) The market interest...
The true interest rate used by investors to value a bond is called the:
The true interest rate used by investors to value a bond is called the:A) Face interest rate.B) Cash payment rate.C) Market interest rate.D) Stated interest...
The rate quoted in the bond contract used to calculate the cash payments for interest is called the:
The rate quoted in the bond contract used to calculate the cash payments for interest is called the:A) Face rate.B) Yield rate.C) Market rate.D) Stated...
Given the information below, which bond(s) will be issued at a premium?
Given the information below, which bond(s) will be issued at a premium?Bond 1 Bond 2 Bond 3 Bond 4Stated Rate of Return 7 % 12 % 10 % 8 %Market Rate of...
Given the information below, which bond(s) will be issued at a discount?
Given the information below, which bond(s) will be issued at a discount?Bond 1 Bond 2 Bond 3 Bond 4Stated Rate of Return 10 % 8 % 12 % 12 %Market Rate...
Given the information below, which bond(s) will be issued at a premium?
Given the information below, which bond(s) will be issued at a premium?Bond 1 Bond 2 Bond 3 Bond 4Stated Rate of Return 5 % 10 % 7 % 10 %Market Rate of...
Given the information below, which bond(s) will be issued at a discount?
Given the information below, which bond(s) will be issued at a discount?Bond 1 Bond 2 Bond 3 Bond 4Stated Rate of Return 5 % 7 % 12 % 10 %Market Rate...
Seaside issues a bond with a stated interest rate of 10%, face value of $50,000, and due in 5 years. Interest payments are made semi-annually. The market rate for this type of bond is 8%. What is the issue price of the bond (rounded to nearest whole dollar)?
Seaside issues a bond with a stated interest rate of 10%, face value of $50,000, and due in 5 years. Interest payments are made semi-annually. The market...
Seaside issues a bond with a stated interest rate of 10%, face value of $50,000, and due in 5 years. Interest payments are made semi-annually. The market rate for this type of bond is 12%. What is the issue price of the bond (rounded to nearest whole dollar?
Seaside issues a bond with a stated interest rate of 10%, face value of $50,000, and due in 5 years. Interest payments are made semi-annually. The market...
Bond X and Bond Y are both issued by the same company. Each of the bonds has a face value of $100,000 and each matures in 10 years. Bond X pays 8% interest while Bond Y pays 7% interest. The current market rate of interest is 7%. Which of the following is correct?
Bond X and Bond Y are both issued by the same company. Each of the bonds has a face value of $100,000 and each matures in 10 years. Bond X pays 8% interest...
For a bond issue that sells for more than the bond face amount, the stated interest rate is:
For a bond issue that sells for more than the bond face amount, the stated interest rate is:A) The actual yield rates.B) The prime rate.C) More than the...
A $500,000 bond issue sold for $490,000. Therefore, the bonds:
A $500,000 bond issue sold for $490,000. Therefore, the bonds:A) Sold at a discount because the stated interest rate was higher than the market rate.B)...
A $500,000 bond issue sold for $510,000. Therefore, the bonds:
A $500,000 bond issue sold for $510,000. Therefore, the bonds:A) Sold at a premium because the stated interest rate was higher than the market rate.B)...
A bond issue with a face amount of $500,000 bears interest at the rate of 7%. The current market rate of interest is 6%. These bonds will sell at a price that is:
A bond issue with a face amount of $500,000 bears interest at the rate of 7%. The current market rate of interest is 6%. These bonds will sell at a price...
A bond issue with a face amount of $500,000 bears interest at the rate of 7%. The current market rate of interest is 8%. These bonds will sell at a price that is:
A bond issue with a face amount of $500,000 bears interest at the rate of 7%. The current market rate of interest is 8%. These bonds will sell at a price...
A bond issue with a face amount of $500,000 bears interest at the rate of 10%. The current market rate of interest is also 10%. These bonds will sell at a price that is:
A bond issue with a face amount of $500,000 bears interest at the rate of 10%. The current market rate of interest is also 10%. These bonds will sell...
Convertible bonds:
Convertible bonds:A) Provide potential benefits only to the issuer.B) Provide potential benefits only to the investor.C) Provide potential benefits to...
Which of the following is not true regarding callable bonds?
Which of the following is not true regarding callable bonds?A) This feature allows the issuer to repay the bonds before their scheduled maturity date.B)...
A home loan with fixed monthly payments and the house as collateral most closely represents which of the following bond characteristics?
A home loan with fixed monthly payments and the house as collateral most closely represents which of the following bond characteristics?A) Secured and...
Bonds can be secured or unsecured. Likewise, bonds can be term or serial bonds. Which is more common?
Bonds can be secured or unsecured. Likewise, bonds can be term or serial bonds. Which is more common?A) Secured and term.B) Secured and serial.C) Unsecured...
Serial bonds are:
Serial bonds are:A) Bonds backed by collateral.B) Bonds that mature in installments.C) Bonds with greater risk.D) Bonds issued below the face amount.Answer:...
Term bonds are:
Term bonds are:A) Bonds issued below the face amount.B) Bonds that mature in installments.C) Bonds that mature all at once.D) Bonds issued above the face...
Which of the following definitions describes a secured bond?
Which of the following definitions describes a secured bond?A) Matures on a single date.B) Secured only by the "full faith and credit" of the issuing...
Which of the following definitions describes a serial bond?
Which of the following definitions describes a serial bond?A) Matures on a single date.B) Secured only by the "full faith and credit" of the issuing corporation.C)...
Which of the following definitions describes a term bond?
Which of the following definitions describes a term bond?A) Matures on a single date.B) Secured only by the "full faith and credit" of the issuing corporation.C)...
A common advantage of obtaining long-term funds by issuing bonds, rather than borrowing from the bank, includes which of the following?
A common advantage of obtaining long-term funds by issuing bonds, rather than borrowing from the bank, includes which of the following?A) Bonds involve...
A bond is a formal debt instrument that obligates the borrower to repay a stated amount at the maturity date. This stated amount is referred to as the:
A bond is a formal debt instrument that obligates the borrower to repay a stated amount at the maturity date. This stated amount is referred to as the:A)...
On July 1, 2021, a company signs a 30-month lease for an office building. Lease payments of $6,457 are due every three months (10 payments total), beginning on October 1, 2021. The company's normal borrowing rate is 8% (2% every three months). For what amount would the company record the lease on July 1, 2021 (rounded to nearest whole dollar)? Use (PV of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors.)
On July 1, 2021, a company signs a 30-month lease for an office building. Lease payments of $6,457 are due every three months (10 payments total), beginning...
On January 1, 2021, a company signs a 25-year lease for land. Annual payments of $20,000 begin on December 31, 2021. The company's normal borrowing rate is 6%. For what amount would the company record the lease on January 1, 2021 (rounded to nearest whole dollar)? Use (PV of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors.)
On January 1, 2021, a company signs a 25-year lease for land. Annual payments of $20,000 begin on December 31, 2021. The company's normal borrowing rate...
On April 1, 2021, a company signs a 20-month lease for equipment. Monthly payments of $554.15 begin on May 1, 2021. The company's normal borrowing rate is 12%. For what amount would the company record the lease on April 1, 2021 (rounded to nearest whole dollar)? Use (PV of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors.)
On April 1, 2021, a company signs a 20-month lease for equipment. Monthly payments of $554.15 begin on May 1, 2021. The company's normal borrowing rate...
Before signing a lease, a company reports total assets of $500,000 and total liabilities of $300,000. The company then signs a 30-month lease for equipment with payments of $922.21 each month. The lease payments have a present value of $25,000. After recording the inception of the lease, the company would report which of the following?
Before signing a lease, a company reports total assets of $500,000 and total liabilities of $300,000. The company then signs a 30-month lease for equipment...
A company is deciding between two options: (1) purchase a piece of equipment for $10,000 or (2) lease the same piece of equipment for three years and then return the equipment to the owner. The lease payments are $182.53 per month and have a present value of $6,000. If the company decides to lease, for what amount would the leased asset be recorded at the beginning of the lease?
A company is deciding between two options: (1) purchase a piece of equipment for $10,000 or (2) lease the same piece of equipment for three years and...
At the beginning of the lease period, the lease is reported in the lessee's balance sheet for which amount?
At the beginning of the lease period, the lease is reported in the lessee's balance sheet for which amount?A) Fair value of the underlying asset.B) Present...
Which of the following is recorded by the lessee at the beginning of the lease?
Which of the following is recorded by the lessee at the beginning of the lease?A) Decrease in assets.B) Increase in expenses.C) Increase in revenues.D)...
Which of the following is not a reason why some companies lease rather than buy?
Which of the following is not a reason why some companies lease rather than buy?A) Leasing may allow you to borrow with little or no down payment.B) Leasing...
Which of the following is the number one method of external financing by U.S. companies?
Which of the following is the number one method of external financing by U.S. companies?A) Issuing installment notes.B) Leasing.C) Issuing bonds.D) Borrowing...
Which of the following represents an advantage of leasing rather than buying an asset with an installment note?
Which of the following represents an advantage of leasing rather than buying an asset with an installment note?A) Leasing may offer protection against...
On January 1, 2021, Red, Inc. borrowed cash by issuing a $500,000, 5-year note that specified 6% interest to be paid on December 31 of each year and the $500,000 to be paid at maturity. If the note had instead been an installment note to be paid in four equal payments at the end of each year beginning December 31, 2021, which of the following would be true?
On January 1, 2021, Red, Inc. borrowed cash by issuing a $500,000, 5-year note that specified 6% interest to be paid on December 31 of each year and the...
A company issues a $200,000, 5%, six-year note on January 1, 2021. If the monthly payment is $3,220.99, what is the note's carrying value after the first month's payment is made on January 31, 2021?
A company issues a $200,000, 5%, six-year note on January 1, 2021. If the monthly payment is $3,220.99, what is the note's carrying value after the first...
A company issues a $200,000, 5%, six-year note on January 1, 2021. If the monthly payment is $3,220.99, by how much will the carrying value decrease when the first month's payment is made on January 31, 2021?
A company issues a $200,000, 5%, six-year note on January 1, 2021. If the monthly payment is $3,220.99, by how much will the carrying value decrease when...
A company issues a $200,000, 5%, six-year note on January 1, 2021. What amount will be recorded for interest expense for the first month's payment on January 31, 2021?
A company issues a $200,000, 5%, six-year note on January 1, 2021. What amount will be recorded for interest expense for the first month's payment on...
Camp Elim obtains a $125,000, 6%, five-year loan for a new camp bus on January 1, 2021. If the monthly payment is $2,416.60, by how much will the carrying value decrease when the first payment is made on January 31, 2021?
Camp Elim obtains a $125,000, 6%, five-year loan for a new camp bus on January 1, 2021. If the monthly payment is $2,416.60, by how much will the carrying...
Camp Elim obtains a $125,000, 6%, five-year loan for a new camp bus on January 1, 2021. What amount will be recorded for interest expense for the first month's payment on January 31, 2021?
Camp Elim obtains a $125,000, 6%, five-year loan for a new camp bus on January 1, 2021. What amount will be recorded for interest expense for the first...
How does the amortization schedule for an installment note such as a car loan differ from an amortization schedule for bonds?
How does the amortization schedule for an installment note such as a car loan differ from an amortization schedule for bonds?A) The final carrying value...
The entry to record a monthly payment on an installment note such as a car loan:
The entry to record a monthly payment on an installment note such as a car loan:A) Increases expenses, decreases liabilities, and decreases assets.B)...
Babble Co. signs a five-year installment note on January 1, 2021. At which of the following dates would the carrying value be the lowest?
Babble Co. signs a five-year installment note on January 1, 2021. At which of the following dates would the carrying value be the lowest?A) August 1,...
Babble Co. signs a five-year installment note on January 1, 2021. At which of the following dates would the carrying value be the highest?
Babble Co. signs a five-year installment note on January 1, 2021. At which of the following dates would the carrying value be the highest?A) August 1,...
Which of the following describes monthly installment payments of a note payable?
Which of the following describes monthly installment payments of a note payable?A) The monthly payments equal interest expense plus the reduction of the...
For a ten-year installment note, the portion of the periodic installment payment that represents interest in the third year is:
For a ten-year installment note, the portion of the periodic installment payment that represents interest in the third year is:A) The same as in the fourth...
In each succeeding payment on an installment note:
In each succeeding payment on an installment note:A) The amount of interest expense increases.B) The amount of interest expense decreases.C) The amount...
In each succeeding payment on an installment note:
In each succeeding payment on an installment note:A) The amount that goes to decreasing the carrying value of the note increases.B) The amount that goes...
Which of the following is not a true statement?
Which of the following is not a true statement?A) Companies that are believed to have high bankruptcy risk generally receive low credit ratings and must...
The mixture of liabilities and stockholders' equity a business uses is called its:
The mixture of liabilities and stockholders' equity a business uses is called its:A) Bond contract.B) Carrying value.C) Capital structure.D) Accounting...
Profits generated by the company are a(n):
Profits generated by the company are a(n):A) Source of external financing.B) Source of internal financing.C) Liability.D) Asset.Answer:...
Which of the following is the primary source of corporate equity financing?
Which of the following is the primary source of corporate equity financing?A) Bonds Payable.B) Common Stock.C) Leases.D) Notes Payable.Answer:...
Which of the following is not a primary source of corporate debt financing?
Which of the following is not a primary source of corporate debt financing?A) Bonds Payable.B) Common Stock.C) Leases.D) Notes Payable.Answer:...
How many of the following transactions increase a company's liquidity?
How many of the following transactions increase a company's liquidity?• Provide services on account.• Pay workers' salaries in the current period.• Purchase...
Which of the following would result in an increase in the current ratio, but not necessarily the acid-test ratio?
Which of the following would result in an increase in the current ratio, but not necessarily the acid-test ratio?A) Increase in current assets.B) Increase...
Which of the following would not result in an increase in both the current ratio and the acid-test ratio?
Which of the following would not result in an increase in both the current ratio and the acid-test ratio?A) Increase in cashB) Increase in inventoryC)...
Assuming a current ratio of 1.2 and an acid-test ratio of 0.80, how will an increase in accounts receivable affect each ratio?
Assuming a current ratio of 1.2 and an acid-test ratio of 0.80, how will an increase in accounts receivable affect each ratio?A) No change to the current...
Assuming a current ratio of 1.0 and an acid-test ratio of 0.80, how will the borrowing of cash by issuing a six-month note payable affect each ratio?
Assuming a current ratio of 1.0 and an acid-test ratio of 0.80, how will the borrowing of cash by issuing a six-month note payable affect each ratio?A)...
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