Chapter 14

Chapter 14 - SelfTest,Question1 Correct.

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Self Test, Question 1
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Correct.      All of the following statements related to bonds are correct except bonds: typically have a $1,000 face value. arise from a contract known as a bond debenture. represent a promise to pay a sum of money plus periodic interest. usually pay interest annually. Self Test, Question 2 Correct.      A debenture bond is a (an): unsecured bond. callable bond. term bond. secured bond. Self Test, Question 3
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Correct.      A bond that may be transferred from one owner to another by mere delivery is a: income bond. registered bond. bearer bond. convertible bond. Self Test, Question 4 Correct.      The rate of interest actually earned by bondholders is called the: coupon rate. effective yield. nominal rate. stated rate. Self Test, Question 5
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Correct.      Bonds will sell at a premium when the: stated rate is higher than the nominal rate. effective yield is lower than the stated rate. stated rate is higher than the coupon rate. effective yield is lower than the market rate. Self Test, Question 6 Correct.      Under the effective interest method, bond interest expense is computed by multiplying the bonds': face value by the stated interest rate. carrying value by the effective interest rate. carrying value by the stated interest rate. face value by the effective interest rate. Self Test, Question 7
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Correct.      Under the effective interest method, interest expense: is the same total amount as straight-line interest expense over the term of the bonds. always increases each period the bonds are outstanding. is the same annual amount as straight-line interest expense. always decreases each period the bonds are outstanding. Self Test, Question 8 Correct.      Both discount on bonds payable and premium on bonds payable are: nominal accounts. contra accounts. valuation accounts. adjunct accounts. Self Test, Question 9
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Correct.      A gain or loss from extinguishment occurs when the reacquisition price differs from the bonds': net carrying value. maturity value. par value. face value. Self Test, Question 10 Correct.      Bond issue costs are recorded as a(n): asset. reduction in Bonds Payable. deferred charge. expense. Self Test, Question 11
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Correct.      A long-term note is valued at its: market value. maturity value. present value. face value. Self Test, Question 12 Correct.      When a note is exchanged for property in a bargained transaction, the stated interest rate is presumed to be fair unless: no interest rate is stated. the stated interest rate is unreasonable.
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This note was uploaded on 07/27/2011 for the course ACCT 304 taught by Professor Hendren during the Summer '08 term at Strayer.

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Chapter 14 - SelfTest,Question1 Correct.

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