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