ACCT 2300 Exam 5 (2025/2026)
questions n answers
Market Rate of Interest - ANS ✔✔The rate of interest that investors are willing to receive for
similar bonds of equal risk at the current time.
If bonds are sold, but not matured... - ANS ✔✔you still use the amount the bond was issued at
when recording the journal entry.
Convertible Bonds - ANS ✔✔Bonds that can be converted/exchanged into common stock at the
bondholder's option
Stated interest rate - ANS ✔✔The rate of interest printed on the bond.
Discounting - ANS ✔✔Process of computing a present value because the present value is less
than the future value.
The Future Value of $1 Table - ANS ✔✔Used to calculate how much $100 in hand today would
be worth in 5 years.
Time Value of Money - ANS ✔✔- Invested money earns income over time.
- Cash received sooner preferred over being received later
Carrying Value of Bonds - ANS ✔✔Subtracting the Discount of Bonds Payable Account balance
from the Bonds Payable Account.
Callable Bonds - ANS ✔✔Bonds that may be retired at a prearranged price
, Debenture Bonds - ANS ✔✔unsecured bonds, no collateral backing
Issuance - ANS ✔✔Act of supplying or distributing
Present Value of a Gift - ANS ✔✔PV= $1,000 (Annuity PV Factor, i= 4%, n= 4)
Term Bonds - ANS ✔✔bonds that all mature at the same time
Bonds at 106 mean... - ANS ✔✔106,000
effective interest method - ANS ✔✔The preferred procedure for computing the amortization of
a discount or premium. Under this method, companies compute bond interest expense
(revenue) at the beginning of the period by the effective-interest rate and then subtract bond
interest paid (calculated as the face amount of the bonds times the stated interest rate); the
result is the amortization amount.
Bond - ANS ✔✔a formal contract to repay borrowed money with interest at fixed intervals
Why do companies or governments issue bonds? - ANS ✔✔Because they need to borrow large
amounts of money at one time.
Stated Rate > Market Rate - ANS ✔✔Premium
Stated Rate < Market Rate - ANS ✔✔Discount
Stated Rate = Market Rate - ANS ✔✔Par
questions n answers
Market Rate of Interest - ANS ✔✔The rate of interest that investors are willing to receive for
similar bonds of equal risk at the current time.
If bonds are sold, but not matured... - ANS ✔✔you still use the amount the bond was issued at
when recording the journal entry.
Convertible Bonds - ANS ✔✔Bonds that can be converted/exchanged into common stock at the
bondholder's option
Stated interest rate - ANS ✔✔The rate of interest printed on the bond.
Discounting - ANS ✔✔Process of computing a present value because the present value is less
than the future value.
The Future Value of $1 Table - ANS ✔✔Used to calculate how much $100 in hand today would
be worth in 5 years.
Time Value of Money - ANS ✔✔- Invested money earns income over time.
- Cash received sooner preferred over being received later
Carrying Value of Bonds - ANS ✔✔Subtracting the Discount of Bonds Payable Account balance
from the Bonds Payable Account.
Callable Bonds - ANS ✔✔Bonds that may be retired at a prearranged price
, Debenture Bonds - ANS ✔✔unsecured bonds, no collateral backing
Issuance - ANS ✔✔Act of supplying or distributing
Present Value of a Gift - ANS ✔✔PV= $1,000 (Annuity PV Factor, i= 4%, n= 4)
Term Bonds - ANS ✔✔bonds that all mature at the same time
Bonds at 106 mean... - ANS ✔✔106,000
effective interest method - ANS ✔✔The preferred procedure for computing the amortization of
a discount or premium. Under this method, companies compute bond interest expense
(revenue) at the beginning of the period by the effective-interest rate and then subtract bond
interest paid (calculated as the face amount of the bonds times the stated interest rate); the
result is the amortization amount.
Bond - ANS ✔✔a formal contract to repay borrowed money with interest at fixed intervals
Why do companies or governments issue bonds? - ANS ✔✔Because they need to borrow large
amounts of money at one time.
Stated Rate > Market Rate - ANS ✔✔Premium
Stated Rate < Market Rate - ANS ✔✔Discount
Stated Rate = Market Rate - ANS ✔✔Par
