Principles of Accounting II Module 1 - Chapter 11

The balance in Premium on Bonds Payable should be reported as a deduction from Bonds Payable on the balance sheet.

• True

• False

For a corporation, the shares of outstanding stock plus the shares of treasury stock equals the shares of issued stock.

• True

• False

The balance in Premium on Bonds Payable

• would be added to the related bonds payable on the balance sheet.

• should be reported in the Owner's Equity section of the balance sheet.

• should be reported on the balance sheet as a deduction from the related bonds payable.

• should be allocated to the remaining periods for the life of the bonds by the straight-line method, if the results obtained by that method materially differ from the results that would be obtained by the effective interest rate method.

If bonds are sold at a discount, the carrying amount of the bonds is equal to the face value less the unamortized discount.

• True

• False

Property or services received in exchange for capital stock should be recorded at the par or stated value of the shares issued.

• True

• False

Return on common stockholders' equity is computed by dividing the annual net income available to common stockholders by the average common stockholders' equity for the year.

• True

• False

Only callable bonds can be purchased by the issuing company before maturity.

• True

• False

Cash dividends become an obligation of the corporation on the date they are declared by the board of directors.

• True

• False

The price of a bond is equal to the sum of the interest payments and the face amount of the bonds.

• True

• False

The balance in Discount on Bonds Payable

• should be allocated to the remaining periods for the life of the bonds by the straight-line method, if the results obtained by that method materially differ from the results that would be obtained by the effective interest rate method.

• should be reported on the balance sheet as an asset because it has a debit balance.

• would be added to the related bonds payable to determine the carrying amount of the bonds.

• would be subtracted from the related bonds payable on the balance sheet