INTERMEDIATE ACCOUNTING 2 EXAM
#1 QUESTIONS AND ANSWERS
Held to Maturity = - Answer-Debt securities that the enterprise has the positive intent
and ability to hold to maturity.
Trading Securities = - Answer-investments in debt or equity securities acquired
principally for the purpose of selling them in the near term.
Avail for sale securities = - Answer-Debt Securities not classified as held to maturity, or
trading securities.
Equity Method = - Answer-reporting method using the investment cost adjusted for
subsequence earnings and dividends for investee.
Consolidate - Answer-Method of reporting in which the financial statements of the
investor and investee are combined as if they are a single company.
Effective Rate = - Answer-Recording interest each period as the effective market rate of
interest multiplied by the outstanding balance of debt(during the interest period).
Present Value = - Answer-The present value of a single amount is today's equivalent to
a particular amount in the future.
Zero-Coupon Bonds = - Answer-a debt security that doesn't pay interest, but is traded at
a deep interest, rendering profit at maturity when the bond is redeemed for its full face
value. Investors receive no periodic cash interests, even though annual interest is
revenue is reported for tax purposes.
Stated Rate = - Answer-Interest rate stated on the face of the bond.
Premium = - Answer-Sell for more than face value
Discount = - Answer-Sell for less than face value
Par value = - Answer-The normal value of a bond
Installment Note = - Answer-Notes payable for which equal installment payments
include both an amount that represents interest and an amount that represents a
reduction of the outstanding balance so that at maturity the note is completely paid.
Carrying value of a Bond = - Answer-par/face value of a bond plus any unamortized
premiums or less any unamortized discounts. reported on the balance sheet.
#1 QUESTIONS AND ANSWERS
Held to Maturity = - Answer-Debt securities that the enterprise has the positive intent
and ability to hold to maturity.
Trading Securities = - Answer-investments in debt or equity securities acquired
principally for the purpose of selling them in the near term.
Avail for sale securities = - Answer-Debt Securities not classified as held to maturity, or
trading securities.
Equity Method = - Answer-reporting method using the investment cost adjusted for
subsequence earnings and dividends for investee.
Consolidate - Answer-Method of reporting in which the financial statements of the
investor and investee are combined as if they are a single company.
Effective Rate = - Answer-Recording interest each period as the effective market rate of
interest multiplied by the outstanding balance of debt(during the interest period).
Present Value = - Answer-The present value of a single amount is today's equivalent to
a particular amount in the future.
Zero-Coupon Bonds = - Answer-a debt security that doesn't pay interest, but is traded at
a deep interest, rendering profit at maturity when the bond is redeemed for its full face
value. Investors receive no periodic cash interests, even though annual interest is
revenue is reported for tax purposes.
Stated Rate = - Answer-Interest rate stated on the face of the bond.
Premium = - Answer-Sell for more than face value
Discount = - Answer-Sell for less than face value
Par value = - Answer-The normal value of a bond
Installment Note = - Answer-Notes payable for which equal installment payments
include both an amount that represents interest and an amount that represents a
reduction of the outstanding balance so that at maturity the note is completely paid.
Carrying value of a Bond = - Answer-par/face value of a bond plus any unamortized
premiums or less any unamortized discounts. reported on the balance sheet.
