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ACCT 2300 Exam 5 Questions with Correct Answers |
Updated (100% Correct Answers)
Market Rate of Interest Answer: 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... Answer: you still use the amount the bond
was issued at when recording the journal entry.
Convertible Bonds Answer: Bonds that can be converted/exchanged into
common stock at the bondholder's option
Stated interest rate Answer: The rate of interest printed on the bond.
Discounting Answer: Process of computing a present value because the present
value is less than the future value.
The Future Value of $1 Table Answer: Used to calculate how much $100 in hand
today would be worth in 5 years.
Time Value of Money Answer: - Invested money earns income over time.
- Cash received sooner preferred over being received later
Carrying Value of Bonds Answer: Subtracting the Discount of Bonds Payable
Account balance from the Bonds Payable Account.
Callable Bonds Answer: Bonds that may be retired at a prearranged price
Debenture Bonds Answer: unsecured bonds, no collateral backing
© 2026 All rights reserved
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Issuance Answer: Act of supplying or distributing
Present Value of a Gift Answer: PV= $1,000 (Annuity PV Factor, i= 4%, n= 4)
Term Bonds Answer: bonds that all mature at the same time
Bonds at 106 mean... Answer: 106,000
effective interest method Answer: 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 Answer: a formal contract to repay borrowed money with interest at fixed
intervals
Why do companies or governments issue bonds? Answer: Because they need to
borrow large amounts of money at one time.
Stated Rate > Market Rate Answer: Premium
Stated Rate < Market Rate Answer: Discount
Stated Rate = Market Rate Answer: Par
Discount Natural Balance Answer: Debit (Added)
Premium Natural Balance Answer: Credit (Subtracted)
© 2026 All rights reserved
ACCT 2300 Exam 5 Questions with Correct Answers |
Updated (100% Correct Answers)
Market Rate of Interest Answer: 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... Answer: you still use the amount the bond
was issued at when recording the journal entry.
Convertible Bonds Answer: Bonds that can be converted/exchanged into
common stock at the bondholder's option
Stated interest rate Answer: The rate of interest printed on the bond.
Discounting Answer: Process of computing a present value because the present
value is less than the future value.
The Future Value of $1 Table Answer: Used to calculate how much $100 in hand
today would be worth in 5 years.
Time Value of Money Answer: - Invested money earns income over time.
- Cash received sooner preferred over being received later
Carrying Value of Bonds Answer: Subtracting the Discount of Bonds Payable
Account balance from the Bonds Payable Account.
Callable Bonds Answer: Bonds that may be retired at a prearranged price
Debenture Bonds Answer: unsecured bonds, no collateral backing
© 2026 All rights reserved
, 2
Issuance Answer: Act of supplying or distributing
Present Value of a Gift Answer: PV= $1,000 (Annuity PV Factor, i= 4%, n= 4)
Term Bonds Answer: bonds that all mature at the same time
Bonds at 106 mean... Answer: 106,000
effective interest method Answer: 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 Answer: a formal contract to repay borrowed money with interest at fixed
intervals
Why do companies or governments issue bonds? Answer: Because they need to
borrow large amounts of money at one time.
Stated Rate > Market Rate Answer: Premium
Stated Rate < Market Rate Answer: Discount
Stated Rate = Market Rate Answer: Par
Discount Natural Balance Answer: Debit (Added)
Premium Natural Balance Answer: Credit (Subtracted)
© 2026 All rights reserved
