1. Which of the following is true about bonds payable? A. Bonds payable is always reported as a non-current liability. B. Bonds are usually issued as a form of stock financing. C. Coupon interest payments on term bonds fluctuate depending on the market rate on the date of interest payment. D. It is possible that the total proceeds from the bond issuance equal its maturity value. 2. Which of the following is NOT TRUE about bond interest? A. These are usually paid at designated coupon interest payment dates. B. If a bond is issued at a discount, interest payment is lower than interest expense for the same period. C. If a bond is issued at a discount, interest payment increases over the life of the bond since the carrying value increases. D. A bond issued at more than face value is a bond issued at a premium. 3. At the maturity date, bonds are redeemed at: A. Original issue price B. Face value C. Market value on redemption date D. Market value on redemption date, less any related costs 4. If the market rate of interest at the time of bond issuance is 5%, and the total bond proceeds exceed the face value, which is of the following is the most likely nominal interest? A. 6% B. 5% C. 4% D. 3% 5. Bond issue costs are expensed: A. At issuance B. During the life of the bond C. At maturity D. Bond issue costs are never expensed. 6. A bond was issued at the start of the year. Another bond was issued in the middle of the year, but the market rate was the same as the start of the year. A. For the same face value, proceeds for both bonds will be equal since they have the same market rate. B. For every 1,000 face value, the same amount of coupon interest will be paid for both bonds. C. Both A and B are true. D. Neither A nor B is true. 7. If the nominal and market rates for a bond are equal: A. The proceeds will be equal to face value. B. Coupon interest payment equals interest expense. C. Both A and B are true. D. Either A or B is true. 8. When a bond is issued at a discount: A. Discount on bonds payable account is credited for the amount of the discount. B. Coupon interest is higher than market rate. C. The market is down. D. Bonds payable is credited at face value. 9. Statement 1: Bond market rate is always a whole number percentage. Statement 2: The present value of two (2) bonds with equal face value, and with similar coupon and market rate will not be equal if one is paying interest annually while the other pays semiannually. A. Both statements are true. B. Both statements are false. C. Only Statement 1 is true. D. Only Statement 2 is true. 10. Statement 1: Normally for bonds, interest is payable at least annually. Statement 2: Interest payable classification as current or non-current follows the classification of the related bonds payable. A. Both statements are true. B. Both statements are false. C. Only Statement 1 is true. D. Only Statement 2 is true.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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1. Which of the following is true about bonds payable?
A. Bonds payable is always reported as a non-current liability.
B. Bonds are usually issued as a form of stock financing.
C. Coupon interest payments on term bonds fluctuate depending on the market rate on the date
of interest payment.
D. It is possible that the total proceeds from the bond issuance equal its maturity value.
2. Which of the following is NOT TRUE about bond interest?
A. These are usually paid at designated coupon interest payment dates.
B. If a bond is issued at a discount, interest payment is lower than interest expense for the same
period.
C. If a bond is issued at a discount, interest payment increases over the life of the bond since the
carrying value increases.
D. A bond issued at more than face value is a bond issued at a premium.
3. At the maturity date, bonds are redeemed at:
A. Original issue price
B. Face value
C. Market value on redemption date
D. Market value on redemption date, less any related costs
4. If the market rate of interest at the time of bond issuance is 5%, and the total bond proceeds
exceed the face value, which is of the following is the most likely nominal interest?
A. 6%
B. 5%
C. 4%
D. 3%
5. Bond issue costs are expensed:
A. At issuance
B. During the life of the bond
C. At maturity
D. Bond issue costs are never expensed.
6. A bond was issued at the start of the year. Another bond was issued in the middle of the year, but
the market rate was the same as the start of the year.
A. For the same face value, proceeds for both bonds will be equal since they have the same
market rate.
B. For every 1,000 face value, the same amount of coupon interest will be paid for both bonds.
C. Both A and B are true.
D. Neither A nor B is true.

7. If the nominal and market rates for a bond are equal:
A. The proceeds will be equal to face value.
B. Coupon interest payment equals interest expense.
C. Both A and B are true.
D. Either A or B is true.
8. When a bond is issued at a discount:
A. Discount on bonds payable account is credited for the amount of the discount.
B. Coupon interest is higher than market rate.
C. The market is down.
D. Bonds payable is credited at face value.
9. Statement 1: Bond market rate is always a whole number percentage.
Statement 2: The present value of two (2) bonds with equal face value, and with similar coupon
and market rate will not be equal if one is paying interest annually while the other pays
semiannually.
A. Both statements are true.
B. Both statements are false.
C. Only Statement 1 is true.
D. Only Statement 2 is true.
10. Statement 1: Normally for bonds, interest is payable at least annually.
Statement 2: Interest payable classification as current or non-current follows the classification of
the related bonds payable.
A. Both statements are true.
B. Both statements are false.
C. Only Statement 1 is true.
D. Only Statement 2 is true.

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