A bond issued and supported only by the general credit standing of the issuing corporation is called a(an):
Detailed Answer
Correct answer: (A)
debenture
2
Which of the following statements is not true?
Detailed Answer
Correct answer: (D)
every bond is a coupon bond
3
Which is a disadvantage of bonds?
Detailed Answer
Correct answer: (C)
bonds require payment of periodic interest and maturity value
4
Which type of bond gives the issuing corporation the option of retiring the bond, at a predetermined price, prior to the maturity date of the bond?
Detailed Answer
Correct answer: (A)
callable bond
5
Which is not true of bonds sold at a discount?
Detailed Answer
Correct answer: (D)
the balance of Bonds Payable account will get larger each year
6
When $100,000 of 5% annual interest, 10-year bonds are sold at 98 (98.0%), the total interest expense on the bonds will be:
Detailed Answer
Correct answer: (D)
$52,000
7
When $100,000 of 5% semiannual interest, 10-year bonds are sold at 98 (98.0%), the amount of periodic bond discount using the straight-line method of discount amortization will be:
Detailed Answer
Correct answer: (A)
$100
8
$100,000 of 5% annual interest, 10-year bonds were sold at 98 (98.0%) when the market rate of interest was 6%. The amount of periodic bond discount using the effective interest method of discount amortization for the first annual interest period will be:
Detailed Answer
Correct answer: (A)
$880
9
When $100,000 of 5% annual interest, 10-year bonds are sold at 103.5 (103.50%), the total interest expense on the bonds will be:
Detailed Answer
Correct answer: (B)
$46,500
10
$100,000 of 8% annual interest, 10-year bonds were sold at 105.5 (105.50%) when the market rate of interest was 7%. The amount of periodic bond premium using the effective interest method of bond premium amortization for the first interest period will be: