Questions from Financial Accounting

Q: Annual interest expense for a single bond issue continues to increase over

Annual interest expense for a single bond issue continues to increase over the life of the bonds. Which of the following explains this? a. The market rate of interest has increased since the bonds wer...

Q: When using the effective-interest method of amortization, the book

When using the effective-interest method of amortization, the book value of a bond changes by what amount on each interest payment date? a. Interest expense b. Cash interest payment c. The difference...

Q: Which of the following is not an advantage of issuing bonds when

Which of the following is not an advantage of issuing bonds when compared to issuing additional shares of stock in order to obtain additional capital? a. Stockholders maintain proportionate ownership...

Q: A bond with a face value of $100,000 has

A bond with a face value of $100,000 has a coupon rate of 8 percent. The bond matures in 10 years. When the bond is issued, the market rate of interest is 10 percent. What amount will investors pay fo...

Q: Which account would not be included in the debt-to-

Which account would not be included in the debt-to-equity ratio calculation? a. Unearned Revenue. b. Retained Earnings. c. Income Taxes Payable. d. All of the above are included.

Q: Which of the following is false when a bond is issued at

Which of the following is false when a bond is issued at a premium? a. The bond will issue for an amount above its par value. b. Bonds payable will be credited for an amount greater than the bond’s fa...

Q: A bond with a face value of $100,000 was

A bond with a face value of $100,000 was issued for $93,500 on January 1 of this year. The stated rate of interest was 8 percent and the market rate of interest was 10 percent when the bond was sold....

Q: To determine whether a bond will be sold at a premium,

To determine whether a bond will be sold at a premium, at a discount, or at face value, one must know which of the following pairs of information? a. Face value and the coupon rate on the date the bon...

Q: A State Lottery Commission ran the following advertisement: The Lotto

A State Lottery Commission ran the following advertisement: The Lotto jackpot for this month’s drawing is $10 million, which will be paid out to the winning ticket in equal installments at the end of...

Q: When using the effective-interest method of amortization, interest expense

When using the effective-interest method of amortization, interest expense reported in the income statement is impacted by the a. Face value of the bonds. b. Coupon rate stated in the bond certificate...