Exam (elaborations)
Chapter 14 Long Term Liabilities Bonds And Notes.
- Module
- Chapter_14_Long_Term
- Institution
- Chapter_14_Long_Term
Chapter 14 Long Term Liabilities Bonds And Notes. Accounting 26th Ed by Warren -Test Bank
[Show more]
Content preview
CHAPTER 14: LONG-TERM LIABILITIES: BONDS AND NOTES1. A bond is simply a form of an interest-bearing note.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-01 - 14-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
2. Bondholders are creditors of the issuing corporation.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-01 - 14-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
3. Bondholders claims on the assets of the corporation rank ahead of stockholders.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-01 - 14-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 14: Long-Term Liabilities: Bonds and Notes
4. A bond is usually divided into a number of individual bonds of $500 each.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-02 - 14-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
5. If the bondholder has the right to exchange a bond for shares of common stock, the bond is called a
convertible bond.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-02 - 14-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
6. The prices of bonds are quoted as a percentage of the bonds' market value.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-02 - 14-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
7. The face value of a term bond is payable at a single specific date in the future.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-02 - 14-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 14: Long-Term Liabilities: Bonds and Notes
8. When a corporation issues bonds, it executes a contract with the bondholders, known as a bond debenture.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-02 - 14-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
9. The market rate of interest is affected by a variety of factors, including investors' assessment of current
economic conditions.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-02 - 14-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
10. When the market rate of interest is less than the contract rate for a bond, the bond will sell for a premium.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-02 - 14-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 14: Long-Term Liabilities: Bonds and Notes
11. Bonds are sold at face value when the contract rate is equal to the market rate of interest.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-02 - 14-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
12. The price of a bond is equal to the sum of the interest payments and the face amount of the bonds.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-02 - 14-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
13. If the market rate of interest is 8% and a corporation's bonds bear interest at 7%, the bonds will sell at a premium.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-02 - 14-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
14. The total interest expense over the entire life of a bond is equal to the sum of the interest payments plus the
total discount or minus the total premium related to the bond.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.14-03 - 14-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.22 - Long-Term Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ExamsExpert. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £2.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79789 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now