Navigation » List of Schools » Glendale Community College » Accounting » Accounting 101 – Financial Accounting » Spring 2021 » Chapter 9 Quiz
Below are the questions for the exam with the choices of answers:
Question #1
A The ownership interest of current stockholders is unchanged.
B The cost of borrowing may be lower than the return on equity.
C Debt financing often has no maturity date.
D Interest is tax deductible.
Question #2
A Its mixture of paid-in capital versus retained earnings.
B Its mixture of current versus long-term liabilities.
C Its mixture of liabilities and stockholders’ equity.
D Its mixture of current versus long-term assets.
Question #3
A Assuming more debt is always bad for the company.
B Assuming more debt is always good for the company.
C Assuming more debt reduces leverage.
D Assuming more debt can be good for the company as long as they earn a return in excess of the rate charged on the borrowed funds.
Question #4
A Secured only by the “full faith and credit” of the issuing corporation.
B Supported by specific assets pledged as collateral by the issuer.
C Matures in installments.
D Matures on a single date.
Question #5
A The effect cannot be determined from the information given.
B Remain unchanged.
C Decrease.
D Increase.
Question #6
A A discount or premium depending on the maturity date.
B Face amount.
C A discount.
D A premium.
Question #7
A Carrying value will increase and interest expense will decrease.
B Both increase.
C Both decrease.
D Carrying value will decrease and interest expense will increase.
Question #8
A Higher than cash interest paid.
B Lower or higher depending on current market interest rates.
C Lower than cash interest paid.
D Equal to cash interest paid.
Question #9
A Secured and serial.
B Unsecured and term.
C Secured and term.
D Unsecured and serial.
Question #10
A Gain of $14 million.
B Gain of $2 million.
C Loss of $2 million.
D Gain of $16 million.
Question #11
A Accounts payable.
B Leases.
C
D Notes payable.
E Bonds.
Question #12
A
B Issued above face value.
C Issued below face value.
D Riskier bonds sold at a bargain price.
E Issued at face value.
Question #13
A $2,542
B $2,529
C $2,555
D $3,042
Question #14
A Provide potential benefits to both the issuer and the investor.
B Provide no potential benefits.
C Provide potential benefits to the issuer.
D Provide potential benefits to the investor.
Question #15
A A debit to cash for $47 million.
B No gain or loss on retirement.
C A debit of $5 million to loss on early extinguishment.
D A credit of $5 million to gain on early extinguishment.
Question #16
A Carrying value times the market interest rate.
B Carrying value times the stated interest rate.
C Face amount times the market interest rate.
D Face amount times the stated interest rate.
Question #17
A The debt to equity ratio.
B The times interest earned ratio.
C The return on assets ratio.
D The return on equity ratio.
Question #18
A Provide potential benefits only to the lender.
B Provide no potential benefits.
C Provide potential benefits to both the lender and the borrower.
D Provide potential benefits only to the borrower.
Question #19
A The amount that goes to interest expense decreases.
B The amounts paid for both interest and principal increase proportionately.
C The amount that goes to interest expense is unchanged.
D The amount that goes to interest expense increases.
Question #20
A $500
B $6,000
C $2,542
D $3,042
Question #21
A Above or below face value depending on current market interest rates.
B Above face amount.
C At face amount.
D Below face amount.
Question #22
A The bond’s face amount to be paid at maturity.
B The present value of the bond’s face amount to be paid at maturity.
C The present value of the bond’s face amount plus the present value of its periodic interest payments.
D The present value of the bond’s periodic interest payments over the life of the bond.
Question #23
A $500
B $6,000
C $487
D $513
Question #24
A Record a lease for the present value of the 24 lease payments, Record a lease liability and Record a lease asset.
B Record a lease liability.
C Record a lease asset.
D Record a lease for the present value of the 24 lease payments.
Question #25
A The rate specified in the bond contract used to calculate the cash payments for interest.
B A government-issued rate based on general economic conditions.
C The amount of principal to be returned to the bondholder at the maturity date.
D An implied rate based on the price investors pay to purchase a bond in return for the right to receive the face amount at maturity and periodic interest payments over the remaining life of the bond.
Question #26
A $6,000
B $2,542
C $3,042
D $500
Question #27
A Leased assets are more likely to generate additional profits than are purchased assets.
B Lease payments are tax deductible while depreciation on a purchased asset is not.
C Leases typically require less cash upfront to begin using the asset.
D Leases are not reported as liabilities in the balance sheet.
Question #28
A Issued at face value.
B Issued below face value.
C Issued above face value.
D Riskier bonds sold at a bargain price.
Question #29
A Carrying value increases and interest expense decreases.
B Carrying value and interest expense remain unchanged.
C Carrying value and interest expense decrease
D Carrying value and interest expense increase.
Question #30
A Increase.
B Stay the same.
C Depend on the current market interest rate.
D Decrease.