
Bonds Payable Theory Q- Effective Interest Method
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Hard
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18 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the interest rate written on the face of the bond?
Coupon rate
Nominal rate
Stated rate
Coupon rate
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the rate of interest actually incurred?
Market rate
Yield rate
Effective rate
Market, yield or effective rate
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
When the effective interest method is used, the periodic amortization would
Increase if the bonds were issued at a discount
Decrease if the bonds were issued at a premium
Increase if the bonds were issued at a premium
Increase if the bonds were issued at either a discount or a premium
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A discount on bond payable is charged to interest expense
Equally over the life of the bond
Only in the year the bond is issued
Using the effective interest method
Only in the year the bond matures
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the effective interest rate of a bond measured at
amortized cost?
The stated rate of the bond.
The interest rate currently charged by the entity or by
others for similar bond.
The interest rate that exactly discounts estimated future cash payments through the expected life of the bond or when appropriate, a shorter period to the net carrying amount of the bond.
The basic risk-free interest rate that is derived from observable government bond prices
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
For a bond issue which sells for less than face amount, the market rate of interest is
Dependent on rate stated on the bond
Dependent on rate stated on the bond
Less than rate stated on the bond
Higher than rate stated on the bond
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the market rate of interest for a bond issue which sells for more than face amount?
Less than rate stated on the bond
Equal to rate stated on the bond
Higher than rate stated on the bond
Independent of rate stated on the bond
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