ACCOUNTING CHAPTER 9
REVIEW TEST
If bonds are issued with a stated interest rate higher than the market interest rate, the
bonds will be issued at
A premium.
Face amount.
A discount.
A discount or premium depending on the maturity date. - CORRECT ANSWER-
premium
If bonds are issued at a discount, over the life of the bonds, the carrying value will:
Increase.
Decrease.
Stay the same.
Depend on the current market interest rate. - CORRECT ANSWER-Increase.
Item17
3.7
points
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Item 17 Item 17 3.7 points
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If bonds are issued at a discount, interest expense will be
, Lower than cash interest paid.
Higher than cash interest paid.
Equal to cash interest paid.
Lower or higher depending on current market interest rates. - CORRECT ANSWER-
Higher than cash interest paid.
If bonds are issued at a premium, over the life of the bonds, the carrying value and
interest expense will:
Multiple Choice
Both increase.
Both decrease.
Carrying value will increase and interest expense will decrease.
Carrying value will decrease and interest expense will increase. - CORRECT ANSWER-
Both decrease.
The cash paid for interest on bonds payable is calculated as:
Multiple Choice
Face amount times the stated interest rate.
Carrying value times the market interest rate.
Face amount times the market interest rate.
Carrying value times the stated interest rate. - CORRECT ANSWER-Face amount
times the stated interest rate.
REVIEW TEST
If bonds are issued with a stated interest rate higher than the market interest rate, the
bonds will be issued at
A premium.
Face amount.
A discount.
A discount or premium depending on the maturity date. - CORRECT ANSWER-
premium
If bonds are issued at a discount, over the life of the bonds, the carrying value will:
Increase.
Decrease.
Stay the same.
Depend on the current market interest rate. - CORRECT ANSWER-Increase.
Item17
3.7
points
Time Remaining 11 minutes 10 seconds 00:11:10
Item 17 Item 17 3.7 points
Time Remaining 11 minutes 10 seconds 00:11:10
If bonds are issued at a discount, interest expense will be
, Lower than cash interest paid.
Higher than cash interest paid.
Equal to cash interest paid.
Lower or higher depending on current market interest rates. - CORRECT ANSWER-
Higher than cash interest paid.
If bonds are issued at a premium, over the life of the bonds, the carrying value and
interest expense will:
Multiple Choice
Both increase.
Both decrease.
Carrying value will increase and interest expense will decrease.
Carrying value will decrease and interest expense will increase. - CORRECT ANSWER-
Both decrease.
The cash paid for interest on bonds payable is calculated as:
Multiple Choice
Face amount times the stated interest rate.
Carrying value times the market interest rate.
Face amount times the market interest rate.
Carrying value times the stated interest rate. - CORRECT ANSWER-Face amount
times the stated interest rate.
