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a legal document which summarizes the rights and also privileges that bondholders and the obligations and commitments that the issuing agency is called:

a. A bond indenture

b. A shortcut debenture

c. Trade on the equity

d. A term bond


stockholders of a firm may be reluctant to finance development through issuing more equity because:

a. Leveraging v a debt is constantly a much better idea

b. Their revenue per share may decrease

c. The price of the stock will immediately decrease

d. Dividends must be paid on a regular basis


the contractual interest price is always stated as a(n):

a. Monthly rate

b. Day-to-day rate

c. Semiannual rate

d. Yearly rate


premium on binding payable:

a. Has a debit balance

b. Is a contra account

c. Is taken into consideration to it is in a reduction in the expense of borrowing.

You are watching: The contractual rate of interest is usually stated as a(n)

d. Is deducted native bonds payable top top the balance sheet.


if the sector interest rate is greater than the coupon (stated) attention rate, bonds will sell:

a. In ~ a premium

b. In ~ a face value

c. At a discount

d. Just after the stated interest rate is increased


the adhering to exhibit is because that Target bonds.

Bonds close yield volume network change

targ. 8 1/8 100 1/4 8.2 35 +7/8

the contractual interest rate of the target link is:

a. Better than the market interest rate

b. Much less than the sector interest rate

c. Same to the sector interest rate

d. Not determinable


on january 1, 2005, approve corporation approve $4,000,000, 10-year, 8% bonds at 102. Attention is payable semiannually ~ above january 1 and also july 1. The journal entry to record this transaction top top january 1, 2005 is:

a. Cash 4,000,000

bonds payable 4,000,000

b. Cash 4,080,000

binding payable 4,080,000

c. Premium on bonds payable 80,000

cash 4,000,000

bond payable 4,080,000

d. Cash 4,080,000

bonds payable 4,000,000

premium on bond pay. 80,000


in the balance sheet, mortgage note payable room reported as:

a. A existing liability only

b. A irreversible liability only

c. Both a current and a irreversible liability

d. A present liability other than for the palliation in major amount


bonds that may be exchanged for usual stock in ~ the alternative of the bondholders space called:

a. Options

b. Share bonds

c. Convertible bonds

d. Callable bonds


when authorizing bond to be issued, the plank of director does not specify the:

a. Total variety of bonds authorized to be sold

b. Contractual interest rate

c. Offering price

d. Complete face worth of the bonds


bonds that are subject to retirement at a stated dollar amount before maturity at the choice of the issuer room called:

a. Callable bonds

b. Beforehand retirement bonds

c. Options

d. Debentures


investors who get checks in their names for interest paid top top bonds should hold:

a. Registered bonds

b. Coupon bonds

c. Bearer bonds

d. Straight bonds


corporations room granted the strength to problem bonds through:

a. Tax laws

b. State laws

c. Federal defense laws

d. Shortcut debentures


the party who has actually the right to practice a speak to option on bonds is:

a. Investment banker

b. Bondholder

c. Bearer

d. Issuer


Lowe agency has $1,500,000 of binding outstanding. The unamortized premium is $19,600. If the company redeemed bonds at 101, what would be the get or loss on the redemption?:

a. $4,600 gain

b. $4,600 loss

c. $15,000 gain

d. $15,000 loss


the present carrying worth of Lane"s $800,000 confront value bond is $797,000. If the bonds are retired at 103, what would certainly be the lot Lane would pay that bondholders?:

a. $797,000

b. $800,000

c. $820,000

d. $824,000


if sixty $1,000 convertible bonds v a moving value the $70,000 space converted into 9,000 shares of $5 par value common stock, the newspaper entry to document the counter is:

a. Bonds Pay. 70,000

usual stock 70,000

b. Bonds pay 60,000

premium bonds 10,000

common stock 70,000

c. Bonds salary 60,000

prem. Bonds 10,000

usual stock 45,000

paid-in cap excess par 25,0000


when a firm retires bonds prior to maturity, the gain or lose on redemption is the difference in between cash paid and the:

a. Carrying value the the bonds

b. Challenge value of the bonds

c. Initial selling price the the bonds

d. Maturity worth of the bonds


A mortgage keep in mind payable v a resolved interest price requires the borrower to do installment payments end the hatchet of the loan. Each installment payment consists of interest on the unpaid balance of the loan and also a payment ~ above the principal. V each rate payment, show the effect on the section allocated to attention expense and also the portion allocated to principal.:

a. Increase/increase

b. Increase/decrease

c. Decrease/decrease

d. Decrease/increase


corporations invest in various other companies for all of the complying with reasons except to:

a. Home excess cash till needed

b. Create earnings

c. Meet strategic goals

d. Increase trading of the various other companies" stock


a typical invest to house excess cash until needed is:

a. Stocks of carriers in a connected industry

b. Debt securities

c. Low-risk, extremely liquid securities

d. Share securities


pension funds and also mutual funds regularly invest in debt and also stock securities to:

a. Generate earnings

b. House excess cash till needed

c. Fulfill strategic goals

d. Regulate the firm in which castle invest


at the time of salvation of a blame investment:

a. No journal entry is required

b. The historical cost principle applies

c. The stock investments account is debited as soon as bonds space purchased

d. The invest account is credited for its price plus brokerage fees


the expense of blame investments has each of the following except:

a. Brokerage fees

b. Commissions

c. Accrued interest

d. The price paid


Bay company acquires 60, 8%, 5 year, $1,000 neighborhood bonds on jan 1, 2014 for $60,000. The journal entry to document this investment contains a blame to:

a. Blame investments because that 64,800

b. Blame investments because that 60,000

c. Cash for 60,000

d. Stock investments because that 60,000


Ban co. To buy 50, 5% Waylan agency bonds for $50,000 cash to add brokerage fees that $500. Interest is payable semiannually ~ above july 1 and jan 1. The entry to document the july 1 semiannual interest payment would encompass a:

a. Debit to interest receivable for 1250

b. Credit to interest revenue because that 1250

c. Credit transaction to interest revenue because that 1262.50

d. Credit transaction to debt investments for 1262.50


in accounting for stock investments in between 20% and 50%, the ___ an approach is used.:

a. Consolidated statements

b. Regulating interest

c. Cost

d. Equity


Jacobs Corporationmakes a short-term investment in 100 share of Starr Company"s usual stock.The share is purchased because that $40 a share to add brokerage fees that $300. The entryfor the purchase is

a. Blame Investments............................... 4,000 Cash................................................................. 4,000

b. Stock Investments.............................. 4,300 Cash............................................................... 4,300 c. Share Investments............................... 4,000

BrokerageFee Expense...................................... 300 Cash.......... ...................................................... 4,300 d. Stock Investments............................. 4,000 Cash............................................. .................... 4,000


B. Stock investments 4,300

cash 4,300


Carson Corporation sell 100 shares of usual stockbeing held as a short-lived investment. The share were obtained six months back ata price of $50 a share. Carson sold the shares because that $40 a share. The entry torecord the revenue is

a.Cash...................................................... 4,000

Loss on sale of share Investments................ 1,000 stock Investments........................................... 5,000 b.Cash.................................................. 5,000

Gain on revenue of share Investments............... 1,000

Stock Investments......................................... 4,000 c.Cash............................................................... 4,000 share Investments............................. 4,000

d. Share Investments............................... 4,000 lose on revenue of stock Investments................ 1,000 Cash.................................................................. 5,000


A. Cash 4,000

loss of sale stock invest 1,000

share investments 5,000


cash equivalents do NOT include:

a. Temporary corporate notes

b. Treasury bills

c. Money market funds

d. 2-year certificates of deposit


D. 2-year certificate of deposit


Nagen agency had this transactions in connection with to share investments: Feb. 1 purchased 3,000 shares of Horton company (10%) because that $49,800 cash plus brokerage fees the $1,200.June 1 got cash dividends of $2 per share top top Horton stock.Oct. 1 Sold1,200 shares of Horton stock for $24,000 much less brokerage fees the $600.

a. Debit to share Investments because that $49,800.

b. Credit to Cash for $49,800.

c. Debit to stock Investments for $51,000.

d. Debit to Investment price for $1,200.


C. Debit to share investments for 51,000


Mouns agency owns 30% attention in the stock of Darian Corporation. Throughout the year, Darian payment $20,000 in dividends, and also reports $100,000 in net income. Mouns Company’s investment in Darian will rise Mouns’ net revenue by (SHOW CALCULATIONS for complete credit)

a. $15,000.

b. $30,000.

c. $24,000.

d. $6,000.


B. 100,000x30% = $30,000


For audit purposes, the method used come account for long-term investments in typical stock is established by

a. The quantity paid because that the share by the investor.

b. The extent of an investor"s affect on the operating and also financial affairs of the investee.

c. Even if it is the stock has actually paid dividends in past years.

d. Whether the salvation of the stock by the investor to be "friendly" or"hostile."


B. The degree of one investor"s affect on the operating and also financial affairs of the investee


When an investor owns between 20% and also 50% that the common stock that a corporation, the is usually presumed the the investor

a. Has actually insignificant influence on the investee and also that the cost method should be provided to account for the investment.

b. Should apply the cost method in bookkeeping for the investment.

c. Will certainly prepare consolidated jae won statements.

d. Has far-reaching influence top top the investee and also that the equity technique should be offered to account for the investment.


D. Has far-ranging influence ~ above the invested the the equity an approach should be provided to account because that the investment.


Lanier sectors owns45% that McCoy Company. For the existing year, McCoy reports net revenue of$250,000 and also declares and pays a $60,000 cash dividend. I m sorry of the adhering to correctly presents the newspaper entries to record Lanier"s equity in McCoy"s net income and also the receipt of dividends from McCoy?

a. Dec. 31 stock Investments............. 112,500

Rev. From invest in McCoy Company..... 112,500

Dec. 31 Cash..................................... 27,000

Stock Investments.................................... 27,000

b. Dec. 31 share Investments................... 112,500 Rev. From investment in McCoy firm ........................................ 112,500

Dec. 31 Cash...................................... 60,000

Stock Investments.......................... 60,000

c. Dec. 31 stock Investments..................... 85,500

Rev.from invest in McCoy Company....................................... 85,500


A. Dec 31 stock investments 112,500

revenue in mccoy firm 112,500

Dec 31 cash 27,000

stock investments 27,000


Consolidated jae won statements space prepared as soon as a company owns _________ the the usual stock of another company.

a. Much less than 20%

b. Between20% and also 50%

c. Much less than 50%

d. An ext than 50%


D. Much more than 50%


On august 1, Masters agency buys 2,000 shares ofABD typical stock because that $72,500 cash. Top top December 1, the stock investments aresold for $75,000 in cash. I beg your pardon of the complying with are the exactly journalentries to record for the purchase and also sale the the usual stock?


Aug 1 stock investments 72,500

cash 72,500

Dec 1 stock investments 75,000

cash 72,500

acquire on revenue of stock 2,500


At the finish of its an initial year,the commerce securities portfolio contained the following common stocks. Expense Fair value Atrium coporation, group $ 46,500 $ 50,000Barnes Inc. 60,000 58,000Cantor copy, group 80,000 76,400 $186,500 $184,400 In the following year, the Barnes usual stock is sold for cash proceeds of$57,000. The acquire or loss to be well-known on the sale is a

a. Get of $1,200.

b. Loss of $3,000.

See more: Mobile Suit Gundam Gundam Vs. Zeta Gundam : Gundam Vs, Mobile Suit Gundam: Gundam Vs

c. Lose of $1,000.

d. Lose of $2,000.


A. Gain of 1200


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