B. TRUE OR FALSE. Use the separate answer sheet. 1. If the effective (market) interest rate is less than the coupon (stated) interest rate on the date that bonds are sold, the bond price will be less than the face value of the bonds. 2. The effective interest rate method of amortizing bond discount or premium can only be used when it doesn't materially differ from the straight-line method, as the straight-line method is considered GAAP. 3. 4. 5. 6. 7. 678 8. 9. 10. A stock dividend converts earned capital into contributed capital, but total stockholder equity doesn't change. A bond's carrying value at maturity should equal its par or face value. Most corporations set a par value for their common shares at a fairly large number, such as $100 per share, in order to minimize legal liability on the part of shareholders. Treasury shares are considered to be issued and outstanding. Paid-in capital in excess of par value will be created when a 50% stock dividend is declared. All corporate charters (which give corporations the right to exist) are granted by the Securities Exchange Commission in Washington D.C., an agency of the U.S. federal government, All dividends, including liquidating dividends, are "paid out" of retained earnings (i.e. reduce retained earnings) For dividends, the date of record comes before the date of declaration.
B. TRUE OR FALSE. Use the separate answer sheet. 1. If the effective (market) interest rate is less than the coupon (stated) interest rate on the date that bonds are sold, the bond price will be less than the face value of the bonds. 2. The effective interest rate method of amortizing bond discount or premium can only be used when it doesn't materially differ from the straight-line method, as the straight-line method is considered GAAP. 3. 4. 5. 6. 7. 678 8. 9. 10. A stock dividend converts earned capital into contributed capital, but total stockholder equity doesn't change. A bond's carrying value at maturity should equal its par or face value. Most corporations set a par value for their common shares at a fairly large number, such as $100 per share, in order to minimize legal liability on the part of shareholders. Treasury shares are considered to be issued and outstanding. Paid-in capital in excess of par value will be created when a 50% stock dividend is declared. All corporate charters (which give corporations the right to exist) are granted by the Securities Exchange Commission in Washington D.C., an agency of the U.S. federal government, All dividends, including liquidating dividends, are "paid out" of retained earnings (i.e. reduce retained earnings) For dividends, the date of record comes before the date of declaration.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:B. TRUE OR FALSE. Use the separate answer sheet.
1.
If the effective (market) interest rate is less than the coupon (stated) interest rate on the date that bonds are sold, the
bond price will be less than the face value of the bonds.
2.
The effective interest rate method of amortizing bond discount or premium can only be used when it doesn't
materially differ from the straight-line method, as the straight-line method is considered GAAP.
3.
4.
5.
6.
7.
678
8.
9.
10.
A stock dividend converts earned capital into contributed capital, but total stockholder equity doesn't change.
A bond's carrying value at maturity should equal its par or face value.
Most corporations set a par value for their common shares at a fairly large number, such as $100 per share, in order
to minimize legal liability on the part of shareholders.
Treasury shares are considered to be issued and outstanding.
Paid-in capital in excess of par value will be created when a 50% stock dividend is declared.
All corporate charters (which give corporations the right to exist) are granted by the Securities Exchange
Commission in Washington D.C., an agency of the U.S. federal government,
All dividends, including liquidating dividends, are "paid out" of retained earnings (i.e. reduce retained earnings)
For dividends, the date of record comes before the date of declaration.
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