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Liabilities as either current or long-term




Classifying liabilities as either current or long-term helps creditors assess;A) The extent of a firm's liabilities.;B) The relative risk of a firm's liabilities.;C) The degree of a firm's liabilities.;D) The amount of a firm's liabilities.;2) Bond X and bond Y are both issued by the same company. Each of the bonds has a maturity value of $100,000 and they each pay interest at 8%. The current market rate of interest is 8%. Bond X matures in 7 years while bond Y matures in 10 years. Which of the following is correct?;A) Both bonds will sell for almost the same amount.;B) Both bonds will sell for more than $100,000.;C) Bond X will sell for more than bond Y.;D) Bond Y will sell for more than bond X.;3) Straight-line amortization of bond discount or premium;A) Can be used for amortization of discount or premium in all cases and circumstances.;B) Provides the same amount of interest expense each period as does the effective interest method.;C) Is appropriate for deep discount bonds.;D) Provides the same total amount of interest expense over the life of the bond issue as does the effective interest method.;4) When the interest payment dates are March 1 and September 1, and the notes are issued on July 1, the amount of interest expense to be accrued at December 31 of the year of issue would;A) Not be required.;B) Be for six months.;C) Be for four months.;D) Be for ten months.;5) How would the carrying value of bonds payable be affected by the amortization of each of the following?;Premium Discount;A) No effect No effect;B) No effect Increase;C) Increase Decrease;D) Decrease Increase;6) When a long-term note is given in exchange for equipment, the amount considered as paid for the machine is;A) The invoice price.;B) The wholesale price.;C) The present value of cash outflows discounted at the stated rate.;D) The present value of the note payments discounted at the market rate.


Paper#26072 | Written in 18-Jul-2015

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