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ACCOUNTING 101 FINAL EXAM STUDY
GUIDE WITH QUESTIONS AND ANSWERS
100% VERIFIED
current liability - correct answer_ an obligation that will be satisfied
within the next operating cycle or within one year if the cycle is shorter
than a year
accounts payable, short term notes payable, unearned revenues,
accrued expenses
long term liabilities - correct answer_ obligations that are net satisfied
within 1 year
leases, bonds
what do we use to determine how to account for long-term
investments in stock - correct answer_ Hold debt securities longer than
a year, but not until maturity, they are categorized as available-for-sale
securities and accounted for under the fair value method.
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If the investing company intends to hold a debt security until maturity,
it accounts for the security at amortized cost, as a held-to-maturity
investment
callable bonds - correct answer_ bonds that may be redeemed or
retired before their specified due date
convertible bonds - correct answer_ bonds that can be converted into
common stock at a future time
how is the issue of bonds recorded at par - correct answer_ when par
value it is sold for the face of value amount
how is the issue of bonds recorded at a premium - correct answer_
when it is sold at a premium the difference between the sales price and
face value of the bond must be amortized over the bond's term
how is the issue of bonds recorded at a discount - correct answer_
when a business sells a bond at a discount, it must record a discount
balance in its records and amortize that amount over the bonds term
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what is a capital lease - correct answer_ long term non cancelable debt
what is recorded in the accounting records for a capital lease - correct
answer_ the rights of the considered property should be recorded on
the balance sheet
discount bond - correct answer_ a bond issued at a price below its face
(par) value
premium bond - correct answer_ a bond issued at a price above its face
(par) value
discount on bonds payable is what type of account - correct answer_
contra liability account
retained earnings represent - correct answer_ earnings that have not
been distributed to stockholders
ACCOUNTING 101 FINAL EXAM STUDY
GUIDE WITH QUESTIONS AND ANSWERS
100% VERIFIED
current liability - correct answer_ an obligation that will be satisfied
within the next operating cycle or within one year if the cycle is shorter
than a year
accounts payable, short term notes payable, unearned revenues,
accrued expenses
long term liabilities - correct answer_ obligations that are net satisfied
within 1 year
leases, bonds
what do we use to determine how to account for long-term
investments in stock - correct answer_ Hold debt securities longer than
a year, but not until maturity, they are categorized as available-for-sale
securities and accounted for under the fair value method.
,2|Page
If the investing company intends to hold a debt security until maturity,
it accounts for the security at amortized cost, as a held-to-maturity
investment
callable bonds - correct answer_ bonds that may be redeemed or
retired before their specified due date
convertible bonds - correct answer_ bonds that can be converted into
common stock at a future time
how is the issue of bonds recorded at par - correct answer_ when par
value it is sold for the face of value amount
how is the issue of bonds recorded at a premium - correct answer_
when it is sold at a premium the difference between the sales price and
face value of the bond must be amortized over the bond's term
how is the issue of bonds recorded at a discount - correct answer_
when a business sells a bond at a discount, it must record a discount
balance in its records and amortize that amount over the bonds term
, 3|Page
what is a capital lease - correct answer_ long term non cancelable debt
what is recorded in the accounting records for a capital lease - correct
answer_ the rights of the considered property should be recorded on
the balance sheet
discount bond - correct answer_ a bond issued at a price below its face
(par) value
premium bond - correct answer_ a bond issued at a price above its face
(par) value
discount on bonds payable is what type of account - correct answer_
contra liability account
retained earnings represent - correct answer_ earnings that have not
been distributed to stockholders
