Question 1

Last year, Hadley Bakery's income statement reported the following: net income, $325,600; interest expense, $81,400; and income tax expense, $113,960. The company's times interest earned ratio is

Accepted Answer

A)   5.0 times.
B)   6.4 times.
C)   4.0 times.
D)   4.6 times.E) B) and C)
F) A) and D)

Question 2

A measure of a company's solvency is the

Accepted Answer

A)   inventory turnover ratio.
B)   current ratio.
C)   times interest earned ratio.
D)   asset turnover ratio.E) B) and D)
F) None of the above

Question 3

Instalments can be paid

Accepted Answer

A)   monthly.
B)   quarterly.
C)   semi-annually.
D)   all of the aboveE) A) and C)
F) A) and B)

Question 4

On December 31, 2018, Industrial Exporters issues a $365,000, 6%, 20-year mortgage. The terms require monthly payments of $2,615 (principal and interest - blended payment).InstructionsPrepare the journal entry for Jan 31, 2019 to record the first monthly payment. Include your calculations.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Calculations: $365,...

Question 5

When a long-term note payable with a fixed interest rate has fixed principal payments, it means that

Accepted Answer

A)   the periodic payment amount is fixed.
B)   the periodic payment increases over time.
C)   the periodic payment decreases over time.
D)   no conclusion can be made on the periodic payment.E) A) and B)
F) A) and C)

Question 6

Secured notes are often also referred to as mortgages.

Accepted Answer

A) True 
 B)False

Question 7

With fixed principal payments, the interest ___ each period as the principal ___.

Accepted Answer

A)   decreases, decreases
B)   increases, increases
C)   increases, decreases
D)   decreases, increasesE) B) and D)
F) None of the above

Question 8

$2 million, 6%, 10-year bonds are issued when the market rate is 8%. Interest will be paid quarterly. When calculating the issue price of the bond, the interest rate to be used to calculate the present value of the face amount and the present value of the periodic interest payments is

Accepted Answer

A)   4%.
B)   8%.
C)   6%.
D)   2%.E) A) and B)
F) A) and C)

Question 9

Which of the following statements is false?

Accepted Answer

A)   With blended principal and interest payments, the equal periodic payments result in the interest portion increasing each period.
B)   With blended principal and interest payments, the equal periodic payments result in the principal portion increasing each period.
C)   With blended principal and interest payments, the equal periodic payments result in the interest portion decreasing each period.
D)   With blended principal and interest payments, the equal periodic payments are constant each period.E) All of the above
F) B) and D)

Question 10

Unsecured notes are issued against the general credit of the borrower.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is true?

Accepted Answer

A)   If any portion of a non-current liability is to be paid in the next year, the entire debt should be classified as a current liability.
B)   "Current maturities of non-current debt" refers to the amount of interest on notes payable that must be paid in the current year.
C)   Even though current and non-current debt must be shown separately on the statement of financial position, it is not necessary to prepare a journal entry to recognize this.
D)   A non- current liability is an obligation that is expected to be paid within one year.E) B) and D)
F) None of the above

Question 12

On April 1, Aces Corporation borrows $160,000 from Rigor Bank by signing an 8-month, 3%, bank loan. Interest is due at maturity.InstructionsPrepare the entries listed below associated with the bank loan on the books of Aces Corporation. Its year end is June 30.
a. The entry on April 1 when the loan was received.
b. Any adjusting entries necessary on June 30. Assume no other interest accrual entries have been made.
c. The entry to record repayment of the loan at maturity.

Accepted Answer

The answer of On April 1, Aces Corporation borrows $160,000...

Question 13

Long-term notes may have

Accepted Answer

A)   fixed rates of interest only.
B)   floating interest rates only.
C)   no interest rates.
D)   fixed or floating interest rates.E) B) and C)
F) All of the above

Question 14

Detailed information such as a list showing the amounts of non-current debt that is scheduled to be paid off in each of the next five years should be disclosed in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 15

The market interest rate is often called the

Accepted Answer

A)   stated interest rate.
B)   effective interest rate.
C)   contractual interest rate.
D)   coupon interest rate.E) A) and D)
F) B) and D)

Question 16

As blended principal and interest payments are made on a long-term loan,

Accepted Answer

A)   the interest portion increases and the principal portion decreases.
B)   the interest and principal portions remain the same.
C)   the interest portion decreases and the principal portion increases.
D)   both the interest portion and the principal portion decrease.E) All of the above
F) A) and D)

Question 17

While short-term notes are generally repayable in full at maturity, most long-term notes are repayable in a series of periodic payments called instalments.

Accepted Answer

A) True 
 B)False

Question 18

One example of a liability that is not a financial liability is

Accepted Answer

A)   notes payable.
B)   unearned revenue.
C)   bonds payable.
D)   financial lease.E) B) and C)
F) B) and D)

Exam 10: Reporting and Analyzing Liabilities

Long-term notes may have

Correct Answer
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Correct Answer
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$2 million, 6%, 10-year bonds are issued when the market rate is 8%. Interest will be paid quarterly. When calculating the issue price of the bond, the interest rate to be used to calculate the present value of the face amount and the present value of the periodic interest payments is

Correct Answer
verified

Unsecured notes are issued against the general credit of the borrower.

Correct Answer
verified

As blended principal and interest payments are made on a long-term loan,

Correct Answer
verified

The market interest rate is often called the

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

On December 31, 2018, Industrial Exporters issues a $365,000, 6%, 20-year mortgage. The terms require monthly payments of $2,615 (principal and interest - blended payment).InstructionsPrepare the journal entry for Jan 31, 2019 to record the first monthly payment. Include your calculations.

Correct Answer
verified
Calculations: $365,...
View Answer

Instalments can be paid

Correct Answer
verified

One example of a liability that is not a financial liability is

Correct Answer
verified

A measure of a company's solvency is the

Correct Answer
verified

Which of the following statements is false?

Correct Answer
verified

Detailed information such as a list showing the amounts of non-current debt that is scheduled to be paid off in each of the next five years should be disclosed in the notes to the financial statements.

Correct Answer
verified

While short-term notes are generally repayable in full at maturity, most long-term notes are repayable in a series of periodic payments called instalments.

Correct Answer
verified

When a long-term note payable with a fixed interest rate has fixed principal payments, it means that

Correct Answer
verified

With fixed principal payments, the interest _ each period as the principal _.

Correct Answer
verified

Last year, Hadley Bakery's income statement reported the following: net income, $325,600; interest expense, $81,400; and income tax expense, $113,960. The company's times interest earned ratio is

Correct Answer
verified

Secured notes are often also referred to as mortgages.

Correct Answer
verified

Exam 10: Reporting and Analyzing Liabilities

Long-term notes may have

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

$2 million, 6%, 10-year bonds are issued when the market rate is 8%. Interest will be paid quarterly. When calculating the issue price of the bond, the interest rate to be used to calculate the present value of the face amount and the present value of the periodic interest payments is

Correct AnswerverifiedShow Answer

Unsecured notes are issued against the general credit of the borrower.

Correct AnswerverifiedShow Answer

As blended principal and interest payments are made on a long-term loan,

Correct AnswerverifiedShow Answer

The market interest rate is often called the

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

On December 31, 2018, Industrial Exporters issues a $365,000, 6%, 20-year mortgage. The terms require monthly payments of $2,615 (principal and interest - blended payment).InstructionsPrepare the journal entry for Jan 31, 2019 to record the first monthly payment. Include your calculations.

Correct Answerverified Calculations: $365,...View AnswerShow Answer

Instalments can be paid

Correct AnswerverifiedShow Answer

One example of a liability that is not a financial liability is

Correct AnswerverifiedShow Answer

A measure of a company's solvency is the

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Detailed information such as a list showing the amounts of non-current debt that is scheduled to be paid off in each of the next five years should be disclosed in the notes to the financial statements.

Correct AnswerverifiedShow Answer

While short-term notes are generally repayable in full at maturity, most long-term notes are repayable in a series of periodic payments called instalments.

Correct AnswerverifiedShow Answer

When a long-term note payable with a fixed interest rate has fixed principal payments, it means that

Correct AnswerverifiedShow Answer

With fixed principal payments, the interest ___ each period as the principal ___.

Correct AnswerverifiedShow Answer

Last year, Hadley Bakery's income statement reported the following: net income, $325,600; interest expense, $81,400; and income tax expense, $113,960. The company's times interest earned ratio is

Correct AnswerverifiedShow Answer

Secured notes are often also referred to as mortgages.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Calculations: $365,...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

With fixed principal payments, the interest _ each period as the principal _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified