Exam 4 Review: Accounting

Which of the following terms describe a bond that is issued for more than its face value?

• Issued at a discount

• Issued at a premium

• Issued at face value

• Issued at stated value

True or false: The market rate is the rate that borrowers are willing to pay and lenders are willing to accept for a bond and its risk level

The process of accounting for a discount or premium on bonds until their maturity is known as:

• Depreciation

• Depletion

• Amortization

• None of the answer choices are correct

Which of the following is NOT an advantage of bond financing?

• Bonds do not affect owner control

• Interest on bonds is tax deductible

• Bonds can increase return on equity

• Bonds require payment of both periodic interest and par value at maturity

What is not a common way to retire a bond before maturity?

• Exercise a call option

• Purchase them on the open market

• Buy it back from the bond holder

Too Faced Corporation reports 130 outstanding shares, 650 authorized shares, and 65 shares of treasury stock. How many shares are issued?

Which of the following describes the effect of a stock dividend?

• Decreases Cash

• Increases total stockholders' equity

• Decreases total stockholders' equity

• Does not affect total stockholders' equity

A company issued 30,000 shares of $10 par value common stock. The journal entry to record the transaction would include which of the following?

• debit of $300,000 to common stock

• credit of $30,000 to cash

• credit of $300,000 to common stock

• debit of $30,000 to cash

What does Treasury stock represent?

• The amount paid for stock reacquired and currently held in treasury

• The amount paid to acquire US treasury stock

• Stock issued in exchange for treasury bills

The number of shares outstanding equals the number of shares.

• authorized plus the number of shares issued

• issued minus the number of shares in treasury

• authorized minus the number of shares issued

• issued plus the number of shares in treasury