Question 1

A pension plan is a contractual agreement between an employer and its employees to provide benefits to employees after they retire.

Accepted Answer

A) True 
 B)False

Question 2

The contract between the bond issuer and the bondholders identifying the rights and obligations of the parties,is called a(n) :

Accepted Answer

A)   Debenture.
B)   Bond indenture.
C)   Mortgage.
D)   Installment note.
E)   Mortgage contract.F) C) and D)
G) A) and B)

Question 3

The effective interest method assigns a bond interest expense amount that increases over the life of a premium bond.

Accepted Answer

A) True 
 B)False

Question 4

A company's debt-to-equity ratio was 1.0 at the end of Year 1.By the end of Year 2,it had increased to 1.7.Since the ratio increased from Year 1 to Year 2,the degree of risk in the firm's financing structure decreased during Year 2.

Accepted Answer

A) True 
 B)False

Question 5

Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are known as:

Accepted Answer

A)   Convertible bonds.
B)   Sinking fund bonds.
C)   Callable bonds.
D)   Serial bonds.
E)   Junk bonds.F) A) and E)
G) All of the above

Question 6

The present value of an annuity is equal to the sum of the individual future values for each payment.

Accepted Answer

A) True 
 B)False

Question 7

The market rate for bonds is generally higher when the time period to maturity is longer due to the risk of adverse events occurring over the time period.

Accepted Answer

A) True 
 B)False

Question 8

Match each of the following terms with the appropriate definitions.
-An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest.

Accepted Answer

A)  Convertible bonds
B)  Coupon bonds
C)  Bearer bonds
D)  Bond indenture
E)  Installment noteF) Unsecured bondsG) Market rateH) Serial bondsI) Effective interest rate methodJ) Term bondsK) A) and E)
L) F) and J)

Question 9

An ________ is a series of equal payments at equal time intervals.

Accepted Answer

The answer of An ________ is a series of equal...

Question 10

On July 1,Shady Creek Resort borrowed $250,000 cash by signing a 10-year,8% installment note requiring equal payments each June 30 of $37,258.What is the journal entry to record the first annual payment?

Accepted Answer

A)   Debit Cash $250,000; debit Interest Expense $37,258; credit Notes Payable $287,258.
B)   Debit Interest Expense $37,258; credit Cash $37,258.
C)   Debit Interest Expense $20,000; credit Cash $20,000.
D)   Debit Interest Expense $20,000; debit Interest Payable $17,258; credit Cash $37,258.
E)   Debit Interest Expense $20,000; debit Notes Payable $17,258; credit Cash $37,258.F) A) and B)
G) A) and D)

Exam 10: Accounting for Long-Term Liabilities

A company's debt-to-equity ratio was 1.0 at the end of Year 1.By the end of Year 2,it had increased to 1.7.Since the ratio increased from Year 1 to Year 2,the degree of risk in the firm's financing structure decreased during Year 2.

Correct Answer
verified

Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are known as:

Correct Answer
verified

The market rate for bonds is generally higher when the time period to maturity is longer due to the risk of adverse events occurring over the time period.

Correct Answer
verified

The contract between the bond issuer and the bondholders identifying the rights and obligations of the parties,is called a(n) :

Correct Answer
verified

An ________ is a series of equal payments at equal time intervals.

Correct Answer
verified

Match each of the following terms with the appropriate definitions. -An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest.

Correct Answer
verified

On July 1,Shady Creek Resort borrowed $250,000 cash by signing a 10-year,8% installment note requiring equal payments each June 30 of $37,258.What is the journal entry to record the first annual payment?

Correct Answer
verified

A pension plan is a contractual agreement between an employer and its employees to provide benefits to employees after they retire.

Correct Answer
verified

The present value of an annuity is equal to the sum of the individual future values for each payment.

Correct Answer
verified

The effective interest method assigns a bond interest expense amount that increases over the life of a premium bond.

Correct Answer
verified

Exam 10: Accounting for Long-Term Liabilities

A company's debt-to-equity ratio was 1.0 at the end of Year 1.By the end of Year 2,it had increased to 1.7.Since the ratio increased from Year 1 to Year 2,the degree of risk in the firm's financing structure decreased during Year 2.

Correct AnswerverifiedShow Answer

Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are known as:

Correct AnswerverifiedShow Answer

The market rate for bonds is generally higher when the time period to maturity is longer due to the risk of adverse events occurring over the time period.

Correct AnswerverifiedShow Answer

The contract between the bond issuer and the bondholders identifying the rights and obligations of the parties,is called a(n) :

Correct AnswerverifiedShow Answer

An ________ is a series of equal payments at equal time intervals.

Correct AnswerverifiedShow Answer

Match each of the following terms with the appropriate definitions. -An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest.

Correct AnswerverifiedShow Answer

On July 1,Shady Creek Resort borrowed $250,000 cash by signing a 10-year,8% installment note requiring equal payments each June 30 of $37,258.What is the journal entry to record the first annual payment?

Correct AnswerverifiedShow Answer

A pension plan is a contractual agreement between an employer and its employees to provide benefits to employees after they retire.

Correct AnswerverifiedShow Answer

The present value of an annuity is equal to the sum of the individual future values for each payment.

Correct AnswerverifiedShow Answer

The effective interest method assigns a bond interest expense amount that increases over the life of a premium bond.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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