Ask Financial Accounting Expert

1) A $1,000 bond quoted at 104 would sell for
a) $1,104
b) $1,000
c) $104
d) $10,40

2) When the market rate of interest on bonds is higher than the contract rate, the bonds will sell at
a) A premium
b) Their face value
c) Their maturity value
d) Discount

3) When a bond issued at face value is retired, what is the journal entry?
a) Debit Bond Inters Expense; credit Cash
b) Debit Bonds Payable; credit Cash
c) Debit Cash; credit Bonds Payable
d) Debit Cash; credit Bond Interest Expense

4) The interest rate specified in the bond indenture is called the ______ rate.
a) Market
b) Discount
c) Contract
d) Effective

5) An inflow of cash from investing activities would bee
a) The issuance of stock
b) The sale of investment in equity securities
c) Interest received on loans
d) The purchase of fixed assets.

6) When using the indirect method, which of the following would be included in the net cash flows from operating activities suction of a cash flow statement?
a) Sales of plant, property and equipment
b) Making loans and paying out interest
c) Payment of interest and expenses
d) Issuing bonds and notes

7) If bonds are sold between interest payment dates, the amount of cash issuer receives is
a) More than the market value of the bonds
b) Less than the market value of bonds
c) Equal to the market value of the bonds
d) Equal to the face value of the bonds

8) Bonds payable issued with collateral are called _______ bonds.
a) Debenture
b) Serial
c) Callable
d) Secured

9) A chas outflow from a financing activity would be
a) Paying cash dividends
b) Buying debt and equity securities
c) Paying interest on notes payable
d) Making payments for additional inventory

10) A statement of cash flows is helpful in
a) evaluating cash flows
b) comparing cash flows
c) predicting future cash flows
d) all of the above

11) Assume the following account balances immediately after an interest payment date:
BONDS PAYABLE : $100,000
PREMIUM ON BONDS PAYABLE : $5,000
If the bonds are retired immediately at a total cost of $104,000, what is the journal entry to record this event?
a) Cash 104,000
Loss on Bond Retirement 1,000
Premium on Bonds Payalbe 5,000
Bonds Payable 100,000
b) Bonds Payable 100,000
Premium on Bonds Payable 5,000
Cash 104,000
Gain on Bond Retirement 1,000
c) Bonds Payable 100,000
Loss on Bond Retirement 9,000
Premium on Bonds Payable 5,000
Cash 104,000
d) None of the above

12) The statement of cash flows provides information about all of the following except _________ activities.
a) Organizing
b) Investing
c) Operating
d) Financing

13) A fund set up so that a bond can be retired at maturity is called a _______ fund.
a) Sinking
b) Bond payable
c) Retirement

14) On April 1, Braintree Corporation issued 10%, ten-year, $300,000 bonds at 106. The effective interest rate for these bonds is
a) 10%
b) 9.43%
c) 4.7%
d) 5%

15) For a corporation, a premium on bonds results when
a) the contract rate is greater than the market rate.
b) The contract rate is less than the market rate.
c) The face value is greater than the effective rate.
d) None of the above.

16) When preparing the statement of cash flows by the indirect method, if current liabilities increase the difference is
a) Added to net income.
b) Added to investments.
c) Deducted from net income.
d) Subtracted from investments.

17) Rick Corporation's Accounts Receivable decreased by $25,000 during the year. What is the adjustment to the cash flow statement when it's prepared by the indirect method?
a) Subtract the decrease from the net income in operating activities.
b) Add the decrease to the net income in operating activities.
c) Add the decrease in the investing activities section.
d) Subtract the decrease in the financing activities.

18) Using the indirect method of cash flows, depreciation expense is added to net income to determine the
a) Cash flow from investing activities.
b) Cash flow from financing activities.
c) Cash flow from fixed asset activities.
d) Operating profit before working capital changes.

19) A bond payable is similar to which of the following?
a) Accounts payable
b) Accounts receivable
c) Notes payable
d) Cash

20) The difference between the direct and indirect method of computing the cash flow statement occurs in the _______ activities section.
a) Financing
b) Operating
c) Investing
d) Managing

21) When preparing the statement of cash flows by the indirect method, if accumulated depreciation increases the difference is
a) Added to net income.
b) Added to investments.
c) Deducted from net income.
d) Not considered in the statement of cash flows using the indirect method.

22) The activity that's probably the most important indicator of financial health is the net cast flow from ________ activities.
a) Buying and selling
b) Financing
c) Operating
d) Investing

23) Transactions involving the purchase and sale of fixed assets would be considered _______ activities.
a) Buying and selling
b) Financing
c) Operating
d) Investing

24) A $1,000 bond quoted at 96.5 would sell for
a) $1,000.
b) $965.
c) $96.50.
d) None of the above

25) If a bond is issued at a premium, the effective interest rate is most likely ________ the contract interest rate.
a) Higher than
b) Lower than
c) The same as
d) Answer can't be determined based on information given.

26) Collins Corporation reported a net income of $35,000, depreciation expenses of $20,000 an increase in Accounts Payable of $2,000, and an increase in Accounts Receivable of $3,000. Net cash flow from operating activities using the indirect method is
a) $55,000.
b) $54,000.
c) $50,000.
d) $56,000.

27)Bonds that are backed solely by the general credit of the corporation issuing them are called ________ bonds.
a) Callable
b) Debenture
c) Indenture
d) Convertible

28) A statement of cash flow's purpose is to
a) Show the revenue earned.
b) Show the profits that were generated.
c) Show the expenses that were incurred.
d) Show how cash was generated and used during an accounting period.

29)A bond is issued for less than its face value. Which statement most likely would explain whay?
a) The bond's contract rate is lower than the market rate at the time of the issue.
b) The bond's contract rate is the same as the market rate at the time of the issue.
c) The bond's contract rate is higher than the market rate at the time of the issue.
d) The bond isn't secured by specific assets of the corporation.

30) A statement of cash flow
a) Has three main sections: net cash flow from operating, investing, and financing activities.
b) May be computed directly or indirectly.
c) Is a statement used to better understand the financing and investing activities.
d) All of the above

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M91923052
  • Price:- $30

Priced at Now at $30, Verified Solution

Have any Question?


Related Questions in Financial Accounting

Case study - the athletes storerequiredonce you have read

Case Study - The Athletes Store Required: Once you have read through the assignment complete the following tasks in order and produce the following reports Part 1 i. Enter the business information including name, address ...

Scenario assume that a manufacturing company usually pays a

Scenario: Assume that a manufacturing company usually pays a waste company (by the pound to haul away manufacturing waste. Recently, a landfill gas company offered to buy a small portion of the waste for cash, saving the ...

Lease classification considering firm guidance issues

Lease Classification, Considering Firm Guidance (Issues Memo) Facts: Tech Startup Inc. ("Lessee") is entering into a contract with Developer Inc. ("Landlord") to rent Landlord's newly constructed office building located ...

A review of the ledger of oriole company at december 31

A review of the ledger of Oriole Company at December 31, 2017, produces these data pertaining to the preparation of annual adjusting entries. 1. Prepaid Insurance $19,404. The company has separate insurance policies on i ...

Chelsea is expected to pay an annual dividend of 126 a

Chelsea is expected to pay an annual dividend of $1.26 a share next year. The market price of the stock is $24.09 and the growth 2.6 percent. What is the cost of equity?

Sweet treats common stock is currently priced at 3672 a

Sweet treats common stock is currently priced at $36.72 a share. The company just paid $2.18 per share as its annual dividend. The dividends have been increasing by 2,2 percent annually and are expected to continue doing ...

Highway express has paid annual dividends of 132 133 138

Highway Express has paid annual dividends of $1.32, $1.33, $1.38, $1.40, and $1.42 over the past five years, respectively. What is the average divided growth rate?

An investment offers 6800 per year with the first payment

An investment offers $6,800 per year, with the first payment occurring one year from now. The required return is 7 percent. a. What would the value be today if the payments occurred for 20 years?  b. What would the value ...

Oil services corp reports the following eps data in its

Oil Services Corp. reports the following EPS data in its 2017 annual report (in million except per share data). Net income $1,827 Earnings per share: Basic $1.56 Diluted $1.54 Weighted average shares outstanding: Basic 1 ...

At the start of 2013 shasta corporation has 15000

At the start of 2013, Shasta Corporation has 15,000 outstanding shares of preferred stock, each with a $60 par value and a cumulative 7% annual dividend. The company also has 28,000 shares of common stock outstanding wit ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As