If a bond sells at 97, the market interest rate is

ACCT 3044 Chapter 13 Preview Quiz A

Quiz
•
Mathematics
•
University
•
Hard
Christi Hayne
Used 2+ times
FREE Resource
6 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Greater than the stated interest rate
Equal to the stated interest rate
Less than the stated interest rate
Equal to the coupon rate
2.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
The selling price of a bond is calculated by:
Summing the present values of the principal and periodic interest payments using the market interest rate
Summing the present values of the principal and periodic interest payments using the stated interest rate
Summing the present values of the periodic interest payments using the market interest rate
Summing the present values of the periodic interest payments using the stated interest rate
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A $100,000, 9% interest bond was issued for $104,000. The journal entry to record the issuance of the bond will include:
A credit Bonds Payable, $104,000
A debit to Premium on Bonds Payable, $4,000
A debit to Discount on Bonds Payable, $4,000
A credit to Premium on Bonds Payable, $4,000
4.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
The effective interest rate method calculates bond interest by
multiplying the carrying value of the bonds at the beginning of the period by the stated rate of interest
multiplying the carrying value of the bonds at the beginning of the period by the market rate of interest
dividing the carrying value of the bonds by the number of interest periods
by dividing the carrying value of the bonds by the number of interest periods
5.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
When a bond sells at a discount, interest expense will be
Equal to the bond interest payment
Greater than the bond interest payment
Less than the bond interest payment
It depends
6.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
During the life of the bond, Premium on Bonds Payable will be decreased/amortized with a
debit, thus, increasing the carrying value of the bond
credit, thus, decreasing the carrying value of the bond
debit, thus, increasing the carrying value of the bond
credit, thus, decreasing the carrying value of the bond
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